The Bank of America medical loan is no longer available. And now that?
For a long time, the Bank of America Medical Loan was the best and, in some cases, the only option available for financing doctors and medical residents who wanted to buy a home. On April 1, 2009, Bank of America suspended its Medical Loan Program indefinitely due to the economy and impending restrictions on risky lending practices. This has made finding financing for a new home very difficult for young doctors, especially those still in residency. Other programs are available, but they are often hard to find and are almost always limited to specific geographic areas. If you can find a lender that offers Doctor Loans in your area, then it’s worth checking out because the perks of owning your own home can often make it more affordable than you think.
As a real estate agent specializing in medical real estate, I can personally attest to the fact that for medical residents and young doctors, the most important question when buying a home is whether you can afford your own home at this point in your life. . . With so much student loan debt, many young doctors don’t even consider owning a home until a few years after residency. And many who do are often easily discouraged. However, with proper financing, home mortgage payments can often be more affordable than renting a similar property. The bottom line is, if you plan to stay in the same city for the next few years, then homeownership is definitely something to consider, and you should start by learning about Doctor Loans.
So what is a medical loan? Bank of America and similar programs were built on the idea that young doctors don’t fit the conventional profile of homeowners. They have a lot of student debt and a comparatively lower income. Under conventional lending practices, they would be very risky borrowers. Lenders offering doctor loan programs understand that a doctor with a lot of debt is no less creditworthy, that’s what it means to be a young doctor.
Dr. Loans and other similar mortgages:
- Offer 100% financing that requires no down payment
- Does not require Private Mortgage Insurance (PMI)
- Offer flexible debt-to-income ratios that do not count deferred student loan debt against the applicant
- Offer competitive interest rates that do not penalize the applicant for higher risk indicators
What options are still left? There are some big lenders that offer doctor loan or doctor mortgage programs. They may be able to get you the financing you need and may even have experience working with doctors, but they operate nationally and may not have loan options in your specific area. For example, there are very few options available in the Chicago area, and those that do exist have proven difficult for homebuyers to find. Be careful though because many of these mortgage brokers and lenders sprung up overnight after the Bank of America Program was discontinued and some will try to take advantage of the situation by charging much higher than normal interest rates quoting a “higher risk” and a history of “low-qualified” borrowers. Remember that the entire philosophy of a medical loan is based on the understanding that physicians have unique financial circumstances that do not, in fact, make them risky borrowers.
HASanother option is to find a local Realtor or Realtor where you want to buy a home that specializes in medical real estate. They will often have a connection with a good mortgage broker who offers Medical Loans. This is often a better approach because your real estate agent can help you connect with reliable mortgage brokers, and often they will already have a working relationship with lenders who specialize in this field. Plus, you’ll find that these realtors are experienced with doctors’ unique work schedules and financial circumstances, so they’re better equipped to help you through the financing process and beyond.
How can you request one? Start by searching online for a doctor loan program in your city. Again, many of these programs are limited to geographic areas, so be as specific as possible (ie, “Chicago Physician Loan Program” for Chicago and its suburbs). If you can’t seem to find one in your area, try finding a local real estate agent who specializes in real estate for medical professionals. They must have a connection to a lender or mortgage broker that offers some type of Medical Loan. Then, they should guide you through the entire process, from financing to closing.
Remember, not all Medical Loan Programs will be the same. Although all should have better terms than the financing you could get with a conventional mortgage, some will be noticeably better than others, especially when it comes to the interest rates they offer. Just be diligent when checking and don’t just go with the first lender that says the words “Medical Loan.” Keep this in mind and you’ll be well on your way to owning your own home in no time.