We are dedicated to providing the best financing options for people from all walks of life, all backgrounds, and all professions.
One of the programs we offer is made specifically for licensed medical professionals. Creating better financing options for doctors, dentists, and veterinarians, it can be a valuable tool for helping more people get the home loan they deserve.
Up to 90% Financing Available for Licensed Medical Professionals
Our Program Delivers Easier Debt-to-Income Ratio Requirements
The main advantage of this program is that it allows potential buyers to take advantage of lenient debt-to-income ratio requirements. Debt-to-income, or “DTI,” is an important factor that lenders consider before issuing a loan. Essentially, the number is a statement of a person’s outgoing debt payments compared to their income, and, for ease, it is usually calculated monthly. For example, if a person makes $8,000 a month, and their outgoing debt is currently $2,000 total a month, their DTI is 25%. ($2,000 is 25% of $8,000.) From the lender’s perspective, the lower the DTI, the better.
So what does this have to do with the program for licensed medical professionals? The highlight of the program is a higher maximum DTI that lenders will allow. For most jumbo loan programs, the maximum DTI is 43%. If you have a DTI of 44% or higher, it creates a higher level of concern and lenders are unable to issue the loan. However, with this program, lenders can issue loans to borrowers with debt-to-income ratios as high as 47%. This may not sound like much, but that 3% swing can be the difference between rejection and acceptance for many aspiring home owners.
Note: Factoring Student Loan Debt into DTI
It practically goes without saying: medical professionals will usually have student loans. The program does take this into account however and provides a small work-around. With this program, any student loan that is deferred for a minimum of 12 months is excluded from your debt-to-income ratio. This can be an important step for lowering the official DTI that lenders consider, and could be the difference between qualification and rejection.
90% Financing Means More Available Capital
The other highlight of the program is the potential for as much as 90% loan-to-value (LTV) financing. Loan-to-value is an expression of the amount of the loan compared to the overall value of the property. If a home is worth $2 million, and the loan is for $1.5 million, then the loan-to-value ratio is 75%. Once again, lenders like to see this ratio as low as possible; the closer it gets to 100%, the more hesitant lenders become.
With this programs, medical professionals can take out a mortgage loan that represents 90% of the property value (90% LTV.) This higher LTV allowance will make more purchasing capital available for medical professionals, and could result in a larger home, or a house that has the features or amenities you prefer.
A Look at the Numbers
Now that we understand the benefits of this program, let’s take a quick look at how the numbers might play out. The program allows for 90% financing on a maximum loan of $2.5 million. This would mean the purchase price would need to be $2,777,777 to qualify.
However, the program also allows for loans up to $3 million, but in this case, the LTV needs to be 85%. For a loan of $3 million, this means the purchase price would have to be $3,529,411.
These are just a few examples of how the program can be worked out. If you have any questions about specifics for the program, or how your situation would work, we encourage you to contact a knowledgable professional who can explain the program in terms of your unique situation.
Who is Eligible for the Program?
With this program, more medical professionals are able to secure affordable mortgages for their home-ownership dreams. But the term “licensed medical professional” is rather broad and vague. To fully understand the program, we need to understand exactly who qualifies.
This program is available for doctors, dentists, dental surgeons, and veterinarians who are actively participating in their field. They need to be currently practicing in order to qualify. There is a slight exception, however: Medical professionals who are newly-licensed medical residents and are currently employed in residency or fellowship will qualify for the program.
Newly-licensed medical students who are about to begin a new employment or residence within 60 days of the transaction will also qualify for the program. However, these professionals will need to bring the appropriate documents to prove that the job will officially begin at a certain time.
Credit Scores and Other Qualifications
Like most loans, credit scores and other financial factors will come into play. We already discussed the more-lenient debt-to-income ratio requirements, as well as the loan-to-value allowances, but borrowers will also need to have a FICO score of at least 720. FICO is one of the largest credit organizations in the world, and their numbers are used by roughly 90% of the top lenders.
If your score is lower than 720, you will likely have difficulty qualifying for a loan. However, there are certain measures you can take to improve your score. Paying bills in a prompt and efficient manner is often the best route to a better credit score, but lowing your DTI by eliminating other debt is another effective measure.
If you think your credit score will be a barrier to using this program, we’d still encourage you to contact a mortgage professional to see if you qualify and to discover if any other options are available. It’s likely that no matter what your score, a knowledgable expert can find the right financing options for your homeownership goals.
With Personalized Service and Dedication, San Diego Purchase Loans Can Increase Your Chance of Approval
Contact us to learn more about our common-sense underwriting.
We treat each person with individualized service, going beyond the numbers to help you get the home loan that fits your specific needs.
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