How are student loans treated in physician loan underwriting?

Most physician loan programs exclude deferred student loans from the debt-to-income calculation entirely, or use the actual income-based repayment (IBR) payment. Conventional lenders typically use 1% of the outstanding balance as a monthly obligation — on $250,000 in student loans, that is $2,500/month added to your DTI.

Are physician loan rates higher than conventional rates?

Physician loan rates are typically 0.125-0.25% higher than comparable conventional loans. However, the absence of PMI usually more than offsets this rate premium on loan amounts above $300,000.

Physician Loan Calculator

Calculate your doctor mortgage payment with $0 down and no PMI. Compare physician loan costs against conventional mortgages, see how student loan exclusions affect your DTI, and model the long-term financial advantages for MDs, DOs, DDSs, DVMs, and PharmDs.

Medical Specialty

Training Status

Loan Amount

Home Value / Purchase Price

Physician Loan Rate

Student Loan Balance

Physician Loan — $0 Down Payment

$3,992/mo

7.0% · 30yr · No PMI · No down payment required

Down Payment Required

Physician loan — 0% down

PMI

None

No PMI despite 0% down

Monthly Payment

$3,992

7.0% rate

Loan Limit (Your Status)

$1,500,000

new-attending typical max

vs Conventional (5% down)

$32,500

You keep this cash with physician loan

Student Loans in DTI

Excluded

Deferred/IBR loans typically excluded

Advanced

Eligible Specialties, Loan Limits & Student Loan Handling

Program-specific rules and underwriting differences

Physician loan programs are offered by select banks and credit unions. Eligibility varies by lender but most accept the following credentials:

Widely Eligible Specialties

MD / DO:All specialties — widest acceptance

DDS / DMD:General and specialty dentists

DVM:Veterinarians (most programs)

PharmD:Clinical pharmacists

OD:Optometrists (select lenders)

Key Eligibility Requirements

✓Valid medical license or proof of residency

✓Signed employment contract (for residents/fellows)

✓Primary residence purchase only (not investment)

✓Credit score typically 680-720+ depending on lender

✓Must be within 10 years of completing training

Pro

Rate Premium vs PMI Savings, Investment Strategy & Refi Path

True cost analysis and long-term wealth optimization

Physician loans typically carry a rate 0.125-0.25% above conventional loans, but require no PMI. Compare the true monthly cost vs a conventional 5%-down loan.

Physician Rate

7.0%

No PMI required

Conventional Rate

6.9%

Lower rate, but PMI with less than 20% down

Rate Premium Cost

$63/mo

Extra cost of physician rate vs conventional

PMI Saved (vs 5% down)

$257/mo

PMI you avoid with physician loan

Net Monthly Advantage

$195/mo

Physician loan wins

Conv 5%-Down Payment

$4,314/mo

Including PMI — compare to physician loan

For high loan amounts ($500K+), the rate premium on a physician loan is often less than the PMI saved. On a $600,000 loan, 0.125% higher rate costs ~$62/month extra but saves $250/month in PMI vs a 5%-down conventional loan — a net benefit of $188/month.

How to Use the Physician Loan Calculator

Select your Medical Specialty and Training Status to see the loan limit that applies to you. Enter the Loan Amount (which equals your purchase price with $0 down), your Home Value for comparison purposes, and the Physician Loan Rate you have been quoted. Include your Student Loan Balance to see how physician loan DTI rules differ from conventional underwriting.

The calculator compares your physician loan payment against a conventional loan requiring 5% and 20% down, showing the true cost difference including PMI savings.

Physician Loan Formula

Physician Loan Payment = MonthlyPayment(LoanAmount, PhysicianRate, Term)
PMI Saved = LoanAmount × PMI Rate (0.5%) ÷ 12 [vs 5%-down conventional]
Rate Premium Cost = (PhysicianRate − ConventionalRate) × LoanAmount ÷ 12
Net Monthly Advantage = PMI Saved − Rate Premium Cost

Investment Opportunity = ConventionalDownPayment × (1 + 7%)^Years
DTI Without Physician Loan = Monthly Debts + (StudentBalance × 1%)
DTI With Physician Loan = Monthly Debts + $0 (deferred student loans excluded)

Example: $650,000 Home, New Attending Physician

MD, New Attending, $600K loan, $250K student loans (deferred)

	Physician Loan	Conventional (5% down)	Conventional (20% down)
Down Payment	$0	$32,500	$130,000
Loan Amount	$650,000	$617,500	$520,000
Rate	7.00%	6.875%	6.875%
PMI	None	~$257/mo	None
Monthly P&I	$4,325	$4,058 + $257 PMI = $4,315	$3,417
Student Loan DTI	$0 (excluded)	$2,500 (1% rule)	$2,500 (1% rule)
Cash Preserved	$130,000	$97,500	$0

The physician loan and 5%-down conventional have nearly identical total monthly payments ($4,325 vs $4,315), but the physician loan preserves $130,000 in capital and allows the physician to qualify despite $250,000 in deferred student loans.

Frequently Asked Questions

Physician loans are available to MDs, DOs, DDSs, DMDs, DVMs, PharmDs, and often ODs, NPs, and PAs depending on the lender. You must be purchasing a primary residence. Residents and fellows typically qualify using a signed employment contract showing future income. Most programs require completion of residency within 10 years.

Lenders waive PMI on physician loans because of the borrower profile — medical professionals have high earning potential, stable long-term income, and historically very low default rates. The lender accepts the LTV risk in exchange for capturing a highly desirable long-term banking customer who will likely have substantial future financial product needs.

Most physician loan programs exclude deferred student loans from the debt-to-income calculation entirely, or use the actual income-based repayment (IBR) payment (which may be $0-$300/month for residents). Conventional lenders typically use 1% of the outstanding balance as a monthly obligation — on $250,000 in student loans, that is $2,500/month added to your DTI, often making conventional qualification impossible during residency.

Physician loan rates are typically 0.125-0.25% higher than comparable conventional loans. However, the absence of PMI (which costs 0.3-1.5% of the loan amount annually) usually more than offsets this rate premium on loan amounts above $300,000. On a $600,000 loan, PMI savings of $250+/month typically exceed the rate premium cost of $60-80/month.

For most physicians entering practice, the physician loan is the better choice. Saving 20% on a $600,000 home means accumulating $120,000 while paying rent — which could take 3-5 years and means missing out on home appreciation during that time. The physician loan lets you buy now, invest the down payment capital for potentially higher returns, and refinance to a conventional loan once you reach 20% equity through appreciation and principal paydown.