Doctors, by all accounts, have to pass through a huge number of tests and certifications before they can actually be licensed to practice. They have to spend 4 years in a good college, and then pass a test to go continue their studies. Then they have to spend another 4 years of medical school, after which they need to pass the medical board. Then they specialize.
But at least this profession has its rewards, and we’re not just talking about the satisfaction of helping people get better. We’re talking about ample compensation, and easy ways of borrowing money for whatever reason.
Benefits of Special Loans for Doctors
Here are some of the advantages doctors get when they’re trying to get a personal home mortgage loan:
- The process is expedited. This is quite an improvement over the usual glacial loan process with banks.
- Approval is almost automatic. Even recent medical graduates can get these special loans for doctors, despite the high level of student-loan debt.
- Loans with no down payments are common. This is very hard to find these days, but it’s not a problem with doctors. For new doctors, loans for up to $500,000 may have no down payment requirements. A $1 million loan may require only 5% in down payment.
With just a year of post-residency, there may be no down payment for a loan of up to $650,000 and only a 15% down payment on $1.5 million.
- There’s no private mortgage insurance. This is the insurance that a borrower pays to protect the lender in case of default. But doctors don’t need to get mortgage insurance, which lowers the cost of the loan considerably.
Why It’s Easy to Get Loans for Doctors
Haven’t you heard that rich people who don’t really need money are the people that banks love to lend money to? In the case of doctors, that’s absolutely true. Banks lend money to people who are able to pay their debts, and doctors fit that description well.
According to the Bureau of Labor Statistics, in 2012 primary care physicians get a median annual compensation of $220,942. Those who practice medical specialties receive a median annual compensation of $396,233. Those who specialize in anesthesiology received a median annual compensation of $431,977.
Now when you consider that physicians and surgeons as a group has one of the lowest unemployment rate among all jobs at only 0.8%, you begin to understand why banks feel safe lending to doctors.
There’s another bonus for banks too. They can require doctors to open other accounts with the bank as well. So when the doctor borrows money for their medical practice and for their home mortgage, they put their medical practice’s money in the bank, and they put their own personal finances there too. And when a new doctor is looking for a bank recommendation, the doctor who got the loan from the bank can recommend that bank to him.