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Buying a house in 2021: What doctors need to know

Experts discuss how the pandemic has impacted physician mortgages, what the housing market in general looks like today, and special considerations for physicians looking for a home.

Over the past year, the pandemic has impacted everyone looking for a home, including physicians, says Tal Frank, president of PhysicianLoans, a Columbus, Ohio-based lender that has been offering loans with special terms to doctors since 1993.

As COVID moved across the U.S. early in 2020, many state governments deemed real estate a nonessential business. Agents could not show homes, and delays impacted appraisals and closings.
After a couple of months, agents were allowed to return to the marketplace. Soon, real estate was red-hot in many parts of the country.

A “very strong seller’s market” has continued into this year, Frank says, with home values climbing sharply due to higher demand and shorter supply. This has made it more difficult for shoppers to successfully make a winning bid on a home.

In addition, some banks that previously offered special terms to doctors pulled back on those products in the wake of the pandemic.

“They did this due to the uncertainty in the financial market at the time,” Frank says. “So, while the loan was still available, it was harder to find for those doctors who did not know where to look.”

He notes that some lenders have not returned to offering such financing.

Getting started

While Frank encourages physicians to educate themselves about the home loan process, he also warns that such research can be a minefield.

“A lot of what is found online are advertisements, hype, strong sales pitches or general information that may not apply to a physician’s unique scenario,” Frank says.

For that reason, finding the right experts can help doctors tap crucial wisdom about the marketplace as they shop for a home.

For example, many doctors relocate to pursue new opportunities, notes Jan Kimbrough Miller, a Grand Junction, Colorado-based real estate agent. They may also buy a home in their new community right away. However, it’s not unusual for plans to change.

“We have all heard of stories where the physician buys a home in preparation for their new job, and the job just doesn’t turn out as planned,” says Kimbrough Miller, who has earned the DRS Agent certification bestowed on agents with a history of guiding physicians through the homebuying process.

A real estate agent who regularly works with physicians is aware of this possible outcome right from the start of the home shopping process. Such agents can zero in on the pros and cons of each home in the context of what it might mean if the physician ends up wanting to relocate after a year, Kimbrough Miller says.

Agents who are experts in working with physicians also can ask pertinent questions, such as:

  • Do you need a home in an area with strong internet service so you can review records, scans and reports from home?
  • Will you need a home office? If so, how big will it need to be? And how isolated does it need to be from other living spaces?
  • Where are you in the contracting and credentialing process? (Delays can impact closing timeliness and the overall lending process, Kimbrough Miller says.)

“If a Realtor is trained to ask the right questions, the experience for the physician buyer will be much simpler,” she says.

Frank recommends looking for an agent who is a certified member of the DRS Agent Network. Such agents—including Kimbrough Miller—have expertise in serving the needs of homebuyers in the medical community. The network has been recommended as a resource by organizations such as the AOA, the Student Osteopathic Medical Association and PhysicianLoans itself.

Helping physicians through the home loan process

Agents with a history of helping physicians also can also suggest overlooked financing options, such as a physician loan.

A physician loan is a type of mortgage that has a more lenient underwriting process. In many cases, doctors can get this type of mortgage with a smaller down payment and no private mortgage insurance requirement.

“Your typical Realtor knows nothing about physician loans or considerations specific to physicians,” Kimbrough Miller says. “It is an expertise.”

Lenders who offer physician loans are willing to do so because doctors are likely to have high future incomes, even if they are grappling with student debt and scanty earnings in the present day.

PhysicianLoans is one provider of such mortgages. Frank says the loans his company provides—which are available to medical doctors, dentists and veterinarians—can save physicians money and help them qualify for a home mortgage when traditional financing is hard to find.

The special features of physician loans might include:

  • 100% financing, with no money down required
  • No private mortgage insurance required
  • No pre-payment penalties
  • Flexible payment terms
  • Special underwriting terms

Relaxed underwriting offers particular advantages to doctors. For example, PhysicianLoans allows doctors to close loans as many as 90 days—or even more—before a new job begins.

By contrast, a typical loan might require you to have started the job before closing, so you can show the lender at least one paycheck, Frank says. Or the lender may insist that you have a state medical license in hand.

“Many relocating doctors may not have the new state license before closing,” he says.

Businesses such as PhysicianLoans also offer other perks for medical professionals. For example, the AOA has a partnership with PhysicianLoans that offers three free months of a home warranty program to AOA members who buy a home using PhysicianLoans. You can find more details on the AOA website (login required).

Making the most of today’s mortgage market

Because real estate sales are booming in many parts of the nation, staying ahead of the homebuying competition is a challenge. Starting early can help, Frank says.

“It is OK to begin exploring both financing and housing options three to six months before planning to look at homes,” he notes.

Like Kimbrough Miller, Frank urges physicians not to go it totally alone. Instead, he believes all physicians shopping for a home and a mortgage should have two key professionals in their corner: a real estate agent familiar with the needs and concerns of physicians and a loan officer.

“Only work with trusted agents and loan officers,” Frank says. “They should not be folks just looking to make a buck.”

PhysicianLoans offers a free service that can help match you with a trusted loan officer, Frank says.

Using such pros can pay big dividends. For example, though physician loans often offer the option of skipping a down payment, this might not always be in your best interest, Frank says. A good loan officer can run various scenarios with differing down payment amounts to help you determine the right move for you.

“If it is possible to use that down payment towards the payoff of other debt, it may be a wise use of the funds,” Frank says. “A loan officer who acts as a good consultant—rather than a salesperson—is key for this kind of analysis.”

The right agent also is a crucial help in a market as competitive as the current one, Kimbrough Miller says. “In a situation of multiple offers, the established Realtor can be the difference between you getting the home or losing out to another offer,” she says.

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  1. Jon

    If anyone requires 100% financing to purchase a house, you shouldn’t buy it. Either you have to much debt or you are trying to live like a physician. Live like a resident. Pay off your debt. Live below your means. Buy a house when you can actually put down 20%. A home purchase is a lifestyle choice, not a requirement. There is nothing unique about physicians. Most people start out with lower incomes and student debt. Most people move several times in their lives for career or other reasons.

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