WHAT IS A PHYSICIAN LOAN?

By definition, if the loan is not one of the three government backed loans- it is a conventional loan. 

 

Somehow over the years the incorrect information has been perpetuated that physician mortgages are not conventional loans and so many people do not consider them. We want to clarify some of these misconceptions and educate you on the differences between conforming and non-conforming conventional loans.

 

Another term you may have heard a non-conforming loan called is a "portfolio" loan. Simply put, portfolio or non-conforming loans don’t follow 100% of the Fannie Mae and Freddie Mac guidelines to be bought in the secondary real estate market. If a loan is non-conforming, that bank is using their own money to lend to you, which means they get to make the rules- for better or worse. This also means the likelihood of your loan being sold or "serviced" is low. 

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Just because a loan is Non-Conforming does not automatically mean it has worse rates or terms. By definition, most physician loans are non-conforming, but they beat out most conforming conventional mortgages every day because of this with better rates and overall loan terms (Click HERE to see the perks of Physician Loans)

 

Essentially they can give you the benefit without the punishments because they are not lending someone else's money. Physician loan lenders do also offer conforming conventional 30 year fixed mortgages if you ask for it, they just usually won't give you that option because it is a "worse" program with more out of pocket closing costs, and higher rates traditionally.

 

Most physician loans follow 90% of the lending guidelines Fannie Mae and Freddie Mac set, here are the "exceptions" that makes conventional physician loans ineligible to be sold to Fannie Mae and Freddie Mac.