Wealth Building · 9 min read
The Physician Mortgage — and When Not to Use It
0% down, no PMI, closes on a signed contract before your first paycheck. A genuinely good tool — pointed at the most expensive mistake of the first attending year.
Reviewed by Jonathan Shafer, DO, July 2026. Disclosure: the reviewer is the founder and owner of Attending Financial LLC. This is education, not individualized financial advice.
The loan built just for you
Banks built an entire loan product for one profession. The physician mortgage exists because lenders noticed two things: physician income is unusually predictable, and physician defaults are unusually rare — even with six figures of student debt. So they waive the rules: little or nothing down, no mortgage insurance, and they’ll close on a signed employment contract before your first paycheck clears. It is a genuinely useful tool. It is also the enabling technology of the most expensive mistake of the first attending year — buying the big house immediately. This module covers both halves honestly.
One question · thirty seconds · no account
Wealth Building · board-style
A new attending buys a $600,000 home with a 0%-down physician loan the month she starts her first job. Fourteen months later the group implodes and she takes a job two states away, selling the house for exactly what she paid. Roughly what does the move cost her, and why?
Physician mortgage
A portfolio loan for MDs, DOs, and often dentists/veterinarians: typically 0–10% down on homes up to $750,000–$1M+, no private mortgage insurance (PMI), student debt treated gently in the debt-to-income math (the payment or excluded entirely), and a signed employment contract accepted as proof of income — you can close before you ever get paid.
One definition, then the fine print that matters.
Why it matters: A conventional borrower putting less than 20% down pays PMI — often $200–500 a month protecting the LENDER, not you. The physician loan deletes that cost and the down-payment wait. The trade: usually a slightly higher rate than the best conventional offer, and a limit that is really a temptation — the bank will approve far more house than the guideline below suggests you buy.
The four features — and the catch
Tap each card. The features are real; so is the last one.
0–10% down, no PMI
The signature feature. On a $600,000 home, keeping the $120,000 down payment in your pocket preserves liquidity for loans and investing — while skipping the PMI a conventional low-down borrower would pay.
A contract counts as income
Underwriting accepts your signed attending contract with a future start date — you can buy weeks before residency ends. Convenient, and exactly how people end up owning a house in a city they later discover they want to leave.
Student debt handled gently
Conventional DTI math can choke on $250,000 of loans. Physician-loan underwriting uses your actual IDR payment or excludes deferred balances — the loan was designed around the physician balance sheet.
The catch
Rates typically run a bit above the best conventional pricing, and 0% down means a bigger loan accruing interest from day one. The product removes every FRICTION to buying — it does not remove any of the REASONS to wait.
What 0% down actually costs
Physician loan at 0% down versus 20% down.
Bottom line: Zero down is not free money — it is leverage. Keeping the $120,000 liquid is worth it ONLY if those dollars have a better job (killing high-APR debt, capturing the match, funding the emergency band) than saving ~6.5% guaranteed. Run your order of operations, not the lender’s.
The PMI question
The feature that gives the physician loan most of its value.
What is PMI, and why does the physician mortgage’s “no PMI at 0% down” matter?
Private mortgage insurance protects the bank, and the borrower pays for it — the standard toll for putting less than 20% down. The physician loan waives it entirely, which is the honest arithmetic case for the product: low down payment without the monthly penalty. (Protecting YOUR income is a different product — own-occupation disability insurance.)
The year-one purchase
The classic sequence: sign the contract in March, close on the house in June with a physician loan, discover by the following spring that the job, the group, or the city is wrong. First jobs fail often — physician turnover in the first few years is famously high — and selling a house you just bought costs roughly 8–10 percent of its value in agent commissions and closing costs, coming and going. On a $600,000 home that is $50,000+ of vaporized equity, which at 0% down you may not even have yet: you can owe more than the sale nets.
How to avoid it: In a new job and a new city, the case for renting 12–24 months is strong: it is cheap insurance on the two biggest unknowns. If your horizon in the city is genuinely long and the job is known, the arithmetic changes, and the comparison table in this module is how to run it. It is not a failure of adulthood; it is cheap insurance on the two biggest unknowns in your life (the job and the location). Buy when the job has survived its first year, you know the neighborhoods, and your horizon in the house is honestly five-plus years.
Rent vs buy, honestly
Owning has unrecoverable costs too — interest, property tax, insurance, maintenance. A useful heuristic says they total roughly 5% of the home’s value per year.
| Factor | Renting | Buying | |
|---|---|---|---|
| Unrecoverable cost | Unrecoverable cost | The rent | ≈ 5%/yr of value — $2,500/mo on a $600k home |
| Flexibility | Flexibility | Leave at lease end | 8–10% round-trip cost to exit |
| Forced saving | Forced saving | None — invest deliberately | Principal paydown builds equity |
| Inflation exposure | Inflation exposure | Rent rises with inflation | Fixed P&I shrinks in real terms |
| Right horizon | Right horizon | Under ~5 years, or new job/city | 5+ years, stable job, known city |
June of your first attending year
You start your first attending job in August at $320,000. A lender has pre-approved you for an $800,000 physician loan on the strength of your signed contract. Your loans sit at $210,000 and your emergency fund is thin.
What do you do about housing?
Buy now — rates might rise, and rent is throwing money away
Rent is not thrown away; it buys flexibility on the two things most likely to change — your job and your city. Buying now stakes $50,000+ of round-trip costs on a job you have not worked a single day of, with a thin cash buffer behind it.
Rent for 12–24 months, run the order of operations, then buy with intention — the better choice
Correct. Rent something comfortable, capture the match, build the emergency band, attack the loans, and learn the city. If the job holds, buy in year two with a physician loan — the product will still exist, and you will be choosing a house instead of absorbing one.
Buy, but stretch to the full $800,000 approval — you’ll grow into it
The approval measures the bank’s risk appetite, not your plan. A useful physician guideline is a mortgage near 2× gross income (~$640,000 here) as a CEILING, not a target — and only once the job has proven itself. “Growing into” a payment is how house-poor attendings are manufactured.
What to do with this
- Physician mortgage: 0–10% down, no PMI, contract-as-income, gentle student-debt treatment — usually at a slightly higher rate.
- 0% down is leverage: on $600k at 6.5%, it costs ≈ $758/month and ≈ $153,000 more lifetime interest than 20% down. Keep the down payment liquid only if it has a better job.
- Rent the first 12–24 months of a new job. Exit costs of ~8–10% make an early sale a five-figure mistake.
- Buying wins on 5+ year horizons; the ~5%/yr unrecoverable-cost heuristic is the honest rent comparison.
- A mortgage near 2× gross income is a physician-finance ceiling, not a target — the bank will happily approve more.
Do this next: If a purchase is on your horizon: write down your honest years-in-this-city estimate, your emergency-band status, and 2× your gross income. If any of the three argues for waiting — wait, and let the physician loan be your tool in year two.
Keep reading
Your First $10,000: The Capstone
You know the vocabulary. Now run the decision: one pile of real money, five places it could go, and the order that beats every other order.
Where Cash Should Live
The spread between the best and worst place to hold cash is roughly $2,400 a year on $60,000.
Inflation: The Silent Pay Cut
Three percent a year sounds harmless. Over a physician career it cuts every unprotected dollar roughly in half — twice.
Reading Your Contract
The clauses that matter most — and what to ask about each one.