Navigating Home Buying During Residency
As a resident, you’re in a unique position to leverage physician loan programs, but timing and location considerations are critical. While you’ve made it through medical school, homeownership during residency requires strategic planning around your limited time, specific financial situation, and geographic constraints.
Location Matters: Affordability Considerations
Where you choose to buy can significantly impact your loan qualification. On a typical resident salary (around $58,000-$65,000 annually), purchasing in high-cost areas may require additional resources. Residents in metropolitan areas with higher housing costs often need either a down payment or family assistance to qualify, while those in more affordable regions may access 100% financing more easily. Before setting your heart on a specific property, it’s critical to connect with one of our experienced mortgage professionals who can assess realistic price ranges based on your income, location, and other financial factors.
Managing Student Loan Impact
How lenders treat your student loan debt can dramatically affect your qualification. Generally, if your loans are deferred at least 30 days before your closing date (and many are in the 6 month grace period during this time), many physician loan programs won’t count them against you to qualify. If your loans aren’t deferred, or less than 30 days from repayment, enrollment in income-driven repayment plans (IBR/IDR, PAYE, REPAYE) is crucial. These reduced payment amounts, over a full standard payment, will be used in your debt calculations, significantly improving your qualification prospects. By connecting with one of our mortgage professionals early, you can better understand how your specific student loan situation affects your borrowing power.
Saving For Closing Costs And Reserves
While physician loans typically offer no down payment options for those that qualify, you’ll still need funds for closing costs, which can range from 2.5% to 5% of the sales price depending on the state and county. Additionally, you’ll need reserves to cover recurring expenses from the day you close until your first paycheck. Family gifts are usually acceptable for these items, so having these conversations with relatives who might be willing to help in advance is important. Even a modest financial cushion can make a significant difference in your homeownership journey.
Credit Profile Optimization
While you likely don’t have time to build credit from scratch, optimizing your existing credit profile is essential. Avoid opening new credit accounts or making major purchases in the months before applying for a mortgage, and pay down credit card balances to below 30% of your limits if possible. Some lenders have more flexible credit options for residents, but these often come with additional requirements. Because you are likely interested in buying soon, consider connecting with one of our preferred lenders before taking any dramatic steps with your credit or resources.
Timing Your Purchase Strategically
Most residents find the optimal time to purchase is either before residency begins, or shortly thereafter. Buying early maximizes the time to build equity over paying rent, and avoids having to move while you’re in the throws of training. Additionally, it’s likely that home prices will increase faster than your income will increase, or in your ability to save money.
How We Can Help You Navigate Residency Homeownership
Our service connects you with mortgage professionals who specialize in physician loans for residents. Many residents don’t realize they qualify for homeownership until speaking with a specialist who understands the unique flexibility of physician loan programs. Take advantage of our free consultation to explore your options before deciding where to live.
