Standard Conventional Loan vs Doctor Loans

Standard Conventional Loans vs Doctor Loans

Conventional loans are the most popular type of home loan. Conventional loans are so popular because if you can qualify for them you usually get the lowest rates, so you end up paying less for your home.
The terms of conventional loans are set by Fannie Mae and Freddie Mac, two government sponsored companies that buy mortgages from lenders. Because these loans are purchased by Fannie Mae and Freddie Mac lenders are more confident in lending out money, since they know the loan amounts will be backed up. This is why lenders have to follow the guidelines if they want their loans purchased.
Conventional loans tend to have the lowest rates however the financial requirements to qualify tend to be some of the hardest, especially when compared to government loan programs like the FHA and VA loans. To qualify for a conventional you need to have a good financial history with not much debt.
If you are a new doctor there is a big chance that you have a lot of debt because of medical school. We all know that medical school is not cheap so debt could be very high. Under normal conventional loan lending standards that kind of debt would in most cases enough to stop someone from being able to qualify. It does not necessarily’t matter how much money you could be making as a doctor if you have a lot of debt a conventional loan could be out of reach.
So if you are a doctor and you have thought about a conventional loan but you were not able to qualify because of medical school debt, or any debt for that matter, then a doctor loan is your answer to homeownership.
The Doctor Loans don’t have the same strict guidelines that you have with conventional lending. The fact that you are a Doctor along with the stablity of future earnings should be enough to qualify in most instances.
That’s just one of advantages a doctor loan has over conventional loans. Conventional loans have high down payments, typically 20% down. If you don’t have thousands of dollars saved up, or a new doctor and haven’t had the time to build up your savings you won’t be able to purchase a home with a conventional loan. With a Doctor Loan you can purchase a home for no money down and preserve the cash you do have for helping grow with Medical Practice.
Then on top of that there is a lending limit of $417,000 with conventional loans, so if you are looking to purchase a higher priced home it won’t work. Doctor loan limits are much higher generally up to $1,500,000.
When you add it all up you can see why doctor loans can work so well for so many doctors when you compare them to conventional loans. You can get started by using our Purchase Assistant tool for a free rate quote.