Physician Loan vs Conventional Loan —
Which Is Right for You?

The Core Difference in One Sentence

An ER attending at Cedars-Sinai with $240,000 in student loans and 5% saved would get denied for a $650,000 conventional mortgage — debt-to-income too high, down payment too low, and $400/month in PMI tacked on even if they squeezed through. With a physician loan, that same doctor closes at 0% down, no PMI, and the student debt never touches the DTI calculation.

Down Payment — 0% vs 20%

On a $650,000 home, a conventional loan at 20% down means writing a check for $130,000 at closing. Put down less and you trigger PMI — we will get to that next. A physician loan lets you finance the full $650,000 with $0 down and no PMI penalty.

That $130,000 gap is real money. Invested in a diversified index fund averaging 8% annual returns, $130,000 grows to roughly $280,000 in ten years. Or it is a 12-month emergency fund for a family of four. Or it covers moving costs, furnishing a house, and paying off a car loan — all at once.

Even the minimum conventional down payment of 3% ($19,500) still triggers PMI. And 3% down on a $650,000 loan means borrowing $630,500 with an extra $350–$540 tacked onto your payment every month until you hit 20% equity.

The doctors who benefit most from 0% down are the ones with the least margin for error: residents relocating for fellowship, fellows finishing training and starting an attending role in a new city, and new attendings who spent the last decade earning $60,000–$75,000 while their peers in tech were saving six figures.

A fellow finishing at Johns Hopkins in June who needs to close on a home in Baltimore before starting their attending role at University of Maryland Medical Center in August has eight weeks. Coming up with $130,000 in that window — on a fellow's salary of $72,000 — is not happening. A physician loan lets them close on a $650,000 rowhouse in Canton or Federal Hill with nothing down and move their family in before day one.

If you do have 20% saved and zero student debt, the down payment advantage disappears — and conventional becomes worth comparing on rate alone. But most physicians leaving training are not in that position.

PMI — Why Physicians Never Pay It

Private mortgage insurance exists to protect the lender when you put down less than 20%. On a $650,000 conventional loan at 5% down ($617,500 financed), PMI runs $270–$540 per month depending on your credit score and the insurer. That is $3,240–$6,480 per year, paid by you, protecting the bank.

You pay PMI until you hit 20% equity in the home. On a 30-year conventional loan with 5% down, that takes roughly seven to ten years through normal amortization — faster if the market appreciates, slower if it stalls. Over that span, you are looking at $22,680–$64,800 in total PMI payments. That money builds zero equity and buys you nothing except the privilege of having the loan.

Physician loans eliminate PMI entirely — even at 0% down. This is the single biggest structural advantage of the product. A doctor financing $650,000 with a physician loan saves $350–$540 per month from day one compared to a conventional borrower at the same loan amount with 5% down. Over seven years, that is $29,400–$45,360 back in your pocket.

For a surgery resident at Emory starting at $68,000 per year, $400 per month in PMI is the difference between a comfortable mortgage payment and a paycheck-to-paycheck one. Physician loans were designed specifically to remove that burden.

Some doctors try to avoid PMI conventionally by taking out a piggyback second mortgage (80/10/10 structure). The second lien carries a higher rate — often 8–10% — and the combined payment usually costs more than the physician loan's slight rate premium. Zack runs the numbers on both structures for every client so there are no surprises.

Student Debt and DTI — The Biggest Difference

Debt-to-income ratio is where conventional loans destroy physician applications. Here is the math for an internal medicine resident at Houston Methodist with $280,000 in student loans, a $68,000 salary, and an income-based repayment (IBR) payment of $2,100 per month.

Conventional DTI calculation: Monthly gross income is $5,667. The mortgage payment on a $650,000 home (5% down, 6.25% rate, 30 years) is roughly $3,804 including taxes and insurance. Add the $2,100 student loan payment. Total monthly debt: $5,904. DTI: 104%. The maximum conventional DTI is 45–50%. Application denied — not even close.

Physician loan DTI calculation: Same resident, same income, same home. The physician loan excludes the $280,000 in student debt from DTI entirely. Monthly debt drops to just the mortgage payment: $3,804 (actually lower since there is no PMI — call it $3,650 at 0% down and 6.50%). DTI: $3,650 / $5,667 = 64%. Still high, but physician loan programs allow DTI up to 50% with future income consideration. The lender underwrites based on the signed employment contract showing a starting attending salary of $265,000 ($22,083/month gross). Adjusted DTI: $3,650 / $22,083 = 16.5%. Approved.

The IBR treatment matters too. Conventional lenders often use 0.5–1% of the total student loan balance as the monthly payment for DTI, even if your actual IBR payment is lower. On $280,000, that means $1,400–$2,800 counted as debt — regardless of what you actually pay. Some residents on PAYE or REPAYE have $0 monthly payments during training. Conventional lenders still count $1,400–$2,800. Physician lenders count $0.

Future income consideration is the other lever. A conventional lender uses your current W-2 and nothing else. A physician lender looks at your signed contract, your specialty's market rate, and your start date. A general surgery chief resident at Cleveland Clinic earning $72,000 with a signed offer at $420,000 starting in July is underwritten at the $420,000 figure — not the $72,000.

This combination — student debt exclusion plus future income underwriting — is why physician loans exist. Without it, most graduating residents cannot qualify for a mortgage in the cities where they match. The average medical school debt is $203,000 (AAMC, 2025). For residents at academic medical centers in Houston, Baltimore, Chicago, or Boston, qualifying conventionally while carrying that balance is functionally impossible.

Interest Rates — The Trade-Off

Physician loans are not free money. You pay a rate premium — typically 0.25–0.75% above a comparable conventional rate for the same credit score and loan amount. On a $650,000 loan, the difference between 6.25% (conventional) and 6.75% (physician) adds roughly $220 per month, or $79,200 over 30 years.

That sounds like a lot until you stack it against PMI savings. A conventional borrower at 5% down on the same $650,000 home pays $350–$540 per month in PMI for seven to ten years. At $450 per month for eight years, that is $43,200. The physician loan's rate premium over those same eight years costs roughly $21,120 ($220 × 96 months). Net savings with the physician loan: $22,080 in the first eight years alone.

The break-even point — when the cumulative rate premium exceeds the cumulative PMI savings — lands around year seven to ten for most scenarios. After that, the conventional borrower who has dropped PMI pays less per month. But most physicians refinance or sell before year ten anyway. The average physician homeowner stays in their first home five to seven years.

You can also refinance the physician loan into a conventional once you have 20% equity and your financial picture has changed. Attending three years, student loans partially paid down, home value up — suddenly conventional makes sense. Zack runs this analysis for every client at the 3-year and 5-year marks.

Who should consider conventional on rate alone: If you have $130,000+ saved for a 20% down payment, zero student debt, and your DTI qualifies at current income, a conventional loan at a lower rate saves you money from month one. This is most common for attendings who have been practicing five-plus years, paid off loans, and saved aggressively. For everyone else, the physician loan's rate premium is the cost of getting into a home years sooner.

Who Should Choose a Physician Loan

The physician loan works best when your financial profile does not fit the conventional box yet — and for most doctors finishing training, it does not.

• ✓Residents and fellows — You earn $60,000–$75,000 but will earn $250,000–$500,000 within months. Physician lenders underwrite on your future income with a signed contract. A radiology fellow at UCSF earning $73,000 with a contract for $420,000 qualifies for a $900,000 home. Conventional lenders would cap them around $280,000.
• ✓New attendings relocating — Starting a new job in a new city with 30 days to find housing. Zero percent down and 15–30 day closings mean you are not competing for apartments while carrying $300,000 in student debt. An anesthesiologist starting at Virginia Mason in Seattle can close on a $750,000 condo in Capitol Hill before their first shift.
• ✓Doctors with high student debt— If your student loan balance is $200,000+, conventional DTI math kills your application. The physician loan's DTI exclusion is not a nice-to-have — it is the only way you qualify. This applies to roughly 75% of graduating residents.
• ✓Physicians who want to preserve capital — Even attendings earning $350,000 sometimes choose 0% down to keep $130,000 invested. At 8% annual returns, that $130,000 grows to $280,000 in 10 years. The physician loan lets you build wealth in two places at once — home equity and investment portfolio.

Who Should Stick With Conventional

Physician loans are not always the right answer. Zack talks doctors out of them when the numbers favor conventional — because the right loan is the one that costs you less, not the one with the better marketing.

• •Doctors with 20%+ saved and zero student debt — A cardiologist five years into practice with $200,000 in savings and loans paid off has no use for DTI exclusion or 0% down. Conventional gives them a lower rate from day one. On a $650,000 loan, saving 0.50% on rate means $175 less per month, or $63,000 over 30 years.
• •Physicians buying a second home or investment property — Physician loans are for primary residences only. If you are buying a rental property or vacation home, conventional (or DSCR for investment properties) is your path.
• •Doctors who locked a conventional rate well below current physician loan rates — If you got pre-approved at 5.75% conventional and physician loans are running 6.50–6.75%, the rate gap is too wide for the PMI savings to close. This is rare in 2026 but worth checking.
• •Attendings who paid off student loans— With no student debt dragging your DTI, the physician loan's biggest advantage (DTI exclusion) is irrelevant. You are paying a rate premium for a benefit you do not need. Go conventional and save on interest.

Physician Loan vs Conventional — Quick Comparison

Physician Loan vs Conventional — Common Questions