With the cost of earning a Doctor of Physical Therapy getting more expensive, it’s expected to graduate with huge education loans. The amount of student loan debt can be daunting!
As you start your first job as a PT and begin planning for the life goals such as starting a family, updating the leaky high school car, and buying a house those loans can be scary. How is anyone going to get a home loan with such a high debt amount?
Thankfully, physical therapists qualify for what was formally known as a Physician Home Loan and are now designed for all medical professionals with a Doctorate.
What Is A DPT Home Loan?
You might have heard of a physician home loan or doctor mortgage before, and you may be curious if similar loan types are available to DPTs…and they are!
Physical Therapists face similar challenges as physicians and other medical professionals when seeking mortgage financing. The DPT mortgage loan was born to overcome these challenges, including significant personal and student loan indebtedness, limited down payment availability, and in many instances, a desire to close on a new home before starting a new and higher-paying position.
These loans are designed specifically to accommodate the unique financial situations of physical therapists and allow DPTs to secure home financing with fewer restrictions than conventional loans.
But what exactly is a DPT mortgage loan, and how does it differ from a conventional loan? Here are all the unique features of these loan programs to help you be fully informed as you begin your home buying process.
Features of DPT Mortgage Loans
There are several advantages to DPT mortgage loans when comparing to a traditional loan.
No Private Mortgage Insurance (PMI)
Perhaps the most notorious feature of a DPT mortgage loan is the option to avoid private mortgage insurance. With conventional loans, PMI is required on homes financed with less than a 20% down payment. This insurance protects the lender should you fail to make your payments and range from .1% to 3% of the loan amount depending on the amount financed and your credit score.
Choosing a DPT loan program allows you to reduce significantly or exclude mortgage insurance altogether and potentially save hundreds of dollars every month.
Better Financing Options
Another benefit of a DPT loan is the ability to qualify for higher loan amounts with less money down. NEO Home Loans has several unique financing options that you can qualify for as a DPT, including:
– 95% financing up to $1.25M
– 90% financing up to $2M
Ability to Qualify with Future Income
Rather than requiring pay stubs to prove their income, physical therapists applying for mortgage loans only need to submit their employment contracts to prove their income instead of current pay stubs, as would be the case for a conventional loan. DPT programs also allow for loan closings up to 90 days prior to the future employment start date.
Ability to Qualify with Deferred or Income-Driven Student Loan Payments
DPT mortgage programs also take a different approach when calculating debt-to-income ratios. Typical guidelines would require applying a 1% student loan payment to your monthly liabilities regardless of what the credit report shows.
Many mortgage lenders differ in how they calculate these payments. NEO Home Loans can qualify physical therapists based on income-based payments. This can significantly decrease the debt-to-income ratio and allow for qualification when other payment structures could not. They are also able to completely exclude deferred student loans that are in deferment.
FAQ Regarding Physical Therapy Home Loans
How much is the Average Private Mortgage Insurance per month?
Private mortgage insurance can be a killer and is determined by your debt to income ratio on standard home loan loans. You’ll have to pay PMI unless you can put 20% down, grow your equity to greater than 20% of the home loan, or qualify for a medical professional loan. The average cost of PMI each is from 0.58% to 1.86% of the original loan amount per year.
As an example, if you bought a home for $300,000, with a $5,000 down payment, and a 3% interest rate then your monthly PMI would be between $143 and $457 depending on the rate. That can have a huge impact on the type of home you can afford.
Luckily, that’s why a DPT loan can be a great option as you don’t have to pay the private mortgage insurance.
How Much Down Payment Do I Need with a DPT Loan?
Each situation is different depending on housing costs, income, credit history, and location. It’s best to call and ask a mortgage loan specialist about your own specific rate. Historically, you could put as little down as 3-5% of the total loan while still qualifying for more than a conventional FHA loan.
Is it Better to Pay Off Student Loans or Buy a House After Graduation?
This doesn’t have to be an either-or situation for most people and is unique to each individual person’s financial situation. Buying a home is one of the best ways to establish long-term equity and achieve financial success.
With a DPT loan, you don’t have to sacrifice saving up for a large down payment and feel guilty that you should be using that money towards student loan payments. Because the loans require a smaller down payment you can still focus on student loans while getting into your first home.
Can I Qualify for a DPT Home Loan While on an Income-Based Student Loan?
This is one of the largest misconceptions that exist regarding mortgage loans and one of the unique aspects of applying for a DPT home loan. In fact, some of the income-based student loan repayment programs may even help you qualify for a better loan because it reduces your total expenses each month.
Is a Physician Home Loan the Same as a Medical Profesional Home Loan?
Yes, these are the same types of loans with different names depending on who you talk to. These types of home loans were originally designed for medical students to be able to buy houses while still in low-income times of their careers such as residency. Medical Professionals have great income potential that helps them qualify for loans earlier in their working career.
DPT mortgage loans can be an excellent solution to help you qualify for a home loan when you might not otherwise be able to with a conventional or FHA loan.
If you would like to learn more about a DPT mortgage loan’s features and qualification requirements, visit https://www.medicalprofessionalhomeloans.com/dpt/ to schedule a consultation with one of the DPT mortgage professionals at NEO Home Loans.
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Disclaimer: The information provided in this post is for educational purposes only. This is not a substitute for a medical appointment. Please refer to your physician before starting any exercise program.