Physician Mortgage vs. Conventional Loan: Which Is Actually Better? (2026)
For most physicians buying their first home, a physician mortgage is the better choice — but not always. Run the actual numbers for your situation.
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The Math of the First Home
For most physicians buying their first home, a physician mortgage is the better choice — but not always. If you have less than 20 percent saved for a down payment, large student loan debt, or you are buying before your first attending paycheck, a physician mortgage will almost certainly save you money. If you have 20 percent saved and your debt profile qualifies for conventional underwriting, a conventional loan likely wins on rate.
This guide runs the actual numbers for both options so you can decide based on your specific situation — not assumptions.
What Is a Physician Mortgage?
A physician mortgage — sometimes called a doctor loan — is a specialized home loan designed for MDs, DOs, DDS, DMD, and other medical professionals.
Unlike conventional loans, physician mortgages are portfolio products. The lender keeps the loan on their own books rather than selling it to Fannie Mae or Freddie Mac. That gives them flexibility to set their own rules.
Those rules typically include:
- •0% down payment with no PMI required
- •At some lenders, deferred student loans left out of the DTI calculation (Truist excludes loans deferred 12+ months past closing)
- •Qualification using a signed employment contract before your first paycheck
- •Loan limits from $1.5M to $3.5M depending on the lender
In exchange for that flexibility, physician mortgage rates may run higher. None of the programs we track publishes its rates, and Freddie Mac notes that lenders offering loans without PMI often charge higher interest rates in exchange, so compare quotes on the same day.
What Is a Conventional Loan?
A conventional mortgage is a standard home loan that follows Fannie Mae and Freddie Mac guidelines.
Because lenders sell these loans on the secondary market, every borrower is evaluated the same way. That standardized process works well for borrowers with traditional financial profiles — stable W-2 income, low debt, and 20 percent available for a down payment.
For many physicians early in their careers it works less well because:
- •Deferred student loans are counted at 1% of the outstanding balance per month under Fannie Mae's rules — $250,000 in loans adds $2,500 to your monthly debt load — and at 0.5% under Freddie Mac's whenever the credit report shows $0. A documented income-driven payment is used as is.
- •Less than 20% down means mortgage insurance
- •A signed contract is accepted with limits: if the lender sells the loan before your first paycheck, Fannie Mae requires a start date within 90 days of closing and extra reserves
- •The conforming loan limit is $832,750 in most markets for 2026 (up to $1,249,125 in high-cost areas)
Physician Mortgage vs. Conventional Loan: Side-by-Side Comparison
| Factor | Physician Mortgage | Conventional Loan |
|---|---|---|
| Down payment | 0% up to $1M at most programs; more above that | 3%–20% |
| PMI required | No, at the programs we track that address it | Yes, if below 20% down |
| Interest rate | Not published; get quotes | Priced by credit score and down payment |
| Student loan treatment | Varies; some exclude deferred loans | Documented payment; deferred: 1% (Fannie) or 0.5% (Freddie) |
| Loan limit | $1.5M–$3.5M depending on lender | $832,750 in most areas (conforming) |
| Income documentation | Signed contract accepted | Pay stubs and W-2s; signed offer accepted with limits |
| DTI limit | Rarely published (Huntington: 50%) | Fannie Mae: 36%–45% manual, 50% automated |
| Property type | Primary residence (SouthState also finances second homes) | Primary, second home, investment |
- Physician Mortgage
- 0% up to $1M at most programs; more above that
- Conventional Loan
- 3%–20%
- Physician Mortgage
- No, at the programs we track that address it
- Conventional Loan
- Yes, if below 20% down
- Physician Mortgage
- Not published; get quotes
- Conventional Loan
- Priced by credit score and down payment
- Physician Mortgage
- Varies; some exclude deferred loans
- Conventional Loan
- Documented payment; deferred: 1% (Fannie) or 0.5% (Freddie)
- Physician Mortgage
- $1.5M–$3.5M depending on lender
- Conventional Loan
- $832,750 in most areas (conforming)
- Physician Mortgage
- Signed contract accepted
- Conventional Loan
- Pay stubs and W-2s; signed offer accepted with limits
- Physician Mortgage
- Rarely published (Huntington: 50%)
- Conventional Loan
- Fannie Mae: 36%–45% manual, 50% automated
- Physician Mortgage
- Primary residence (SouthState also finances second homes)
- Conventional Loan
- Primary, second home, investment
The PMI Math Physicians Almost Always Get Wrong
This is the most important calculation in the physician mortgage vs. conventional decision — and most physicians skip it.
Here is how PMI works:
When you put less than 20% down on a conventional loan, the lender requires private mortgage insurance (PMI). Freddie Mac puts PMI at $30 to $70 a month for every $100,000 borrowed, depending on your loan-to-value ratio and credit score, and it protects the lender — not you — against default.
On a $600,000 home with 5% down (a $570,000 loan), PMI runs:
- • $2,052 to $4,788 per year
- • $171 to $399 per month
- • Until your balance is scheduled to reach 80% of the original value, when you can ask to cancel it (it ends automatically at 78%, under federal law) — about 11 years on schedule at a 7% rate, sooner if you pay extra principal
Total PMI cost over roughly 11 years on schedule: about $22,000–$52,000.
A physician mortgage eliminates PMI entirely. If its rate were 0.25 percentage points higher, that would cost about $95 more per month on the same $570,000 loan.
The math: $171–$399 in PMI savings per month versus about $95 in extra interest. The physician mortgage comes out ahead by roughly $75–$300 per month while PMI would be in place, if the rate gap is a quarter point. A bigger rate gap narrows or erases that edge.
Interest Rate: When the Conventional Loan Actually Wins
The conventional loan has a genuine rate advantage — but only under specific conditions.
If you can put 20 percent down, a conventional loan eliminates PMI and gives you the lower rate. That combination beats a physician mortgage every time.
Example: Buying a $700,000 home with $140,000 down (20%), using illustrative rates
- • Conventional loan at 6.75%: No PMI, lower monthly payment, lower total cost
- • Physician mortgage at 7.00%: No PMI advantage since you have 20% down, but pays a higher rate for flexibility you don't need
If you already have 20% saved and your student debt profile doesn't disqualify you from conventional DTI limits, choose the conventional loan.
One caveat worth knowing: conventional rates are easy to benchmark — Freddie Mac's weekly survey put the 30-year fixed average at 7.03% for the week of September 24, 2026 — but physician mortgage rates aren't published, so the only way to see how they compare is to collect quotes. Getting three to five quotes before committing matters even more with a physician mortgage than with a conventional loan, and mortgage credit checks within 45 days count as a single inquiry.
How Student Loan Treatment Changes Everything
For physicians with large student loan balances, this single factor often determines whether they can qualify at all.
Conventional loan calculation (deferred loans):
$250,000 in deferred student loans = $2,500 per month added to your DTI under Fannie Mae's 1% rule ($1,250 under Freddie Mac's 0.5%), even though you pay nothing now.
On a $300,000 salary, $2,500 takes up 10% of your DTI before any mortgage payment.
Physician mortgage calculation (lender that excludes deferred loans):
$250,000 in student loans deferred at least 12 months past closing = $0 added to your DTI at Truist. If you are on IBR at $350/month instead, both loan types count the $350.
Removing $2,500 a month from DTI is worth about $375,000 of loan at a 7% rate.
For deferred loans, that single change can increase your qualifying loan amount by hundreds of thousands of dollars compared to a conventional mortgage. For physicians with $200,000–$400,000 in deferred student loans, a physician mortgage that excludes them is not just better — it may be the only way to qualify at all.
For a full breakdown of how to compare your options, see our physician mortgage lender comparison.
When a Physician Mortgage Is the Better Choice
Choose a physician mortgage if:
- •You have less than 20% saved for a down payment
- •Your student loan balance is large enough to push your DTI above conventional limits
- •You are a resident or fellow qualifying on a signed attending contract
- •You are purchasing above the $832,750 conforming loan limit (higher in some high-cost areas)
- •You want to preserve cash for investing or student loan paydown
When a Conventional Loan Is the Better Choice
Choose a conventional loan if:
- •You have 20% or more saved and can eliminate PMI entirely
- •Your student loans are in repayment with a documented payment, or small enough that the 0.5%–1% conventional calculation for deferred loans doesn't materially impact your qualifying amount
- •You have a clean W-2 employment history and two years of tax returns
- •You are purchasing below the conforming loan limit, where conventional loans are widely available to compare
The Scenario That Surprises Most Physicians
Many physicians assume that once they have 20% to put down, the decision is automatic — conventional loan wins. Not always.
In high-cost markets where homes regularly exceed $800,000, the comparison shifts. A loan above the conforming limit — $832,750 in most counties, up to $1,249,125 in the highest-cost areas — becomes a jumbo loan. Fannie Mae and Freddie Mac don't buy jumbo loans, so each lender sets its own down payment, reserve, and rate terms, and a jumbo quote may not beat a physician mortgage quote by much.
Always run the side-by-side with an actual lender before assuming which option wins in your specific market.
A Note on the 80/10/10 Option
There is a third option physicians sometimes overlook: the 80/10/10 structure.
This involves a first mortgage at 80% of the purchase price, a second loan covering 10%, and a 10% down payment from you. Because the first mortgage is at 80% loan-to-value, PMI is not required on it (Fannie Mae requires mortgage insurance only above 80%) — and you keep the conventional interest rate on that first loan. Price the second loan separately.
Ask your lender to model this scenario alongside the physician mortgage and conventional options before deciding.
Frequently Asked Questions
Is a physician mortgage or conventional loan better for a first-year attending?
Do physician mortgages have higher interest rates than conventional loans?
Can I get a physician mortgage if I have $200,000 in student loans?
Can I refinance a physician mortgage into a conventional loan later?
Does a physician mortgage affect my credit score?
What credit score do I need for a physician mortgage?
Is a physician mortgage only for MDs and DOs?
Sources
Physician lender terms (loan limits, eligible degrees, DTI ceilings, second homes) come from each lender's program page as recorded in our physician mortgage lender comparison and individual lender reviews.
- FHFA Announces Conforming Loan Limit Values for 2026, Federal Housing Finance Agency. Accessed September 27, 2026.
- Selling Guide B3-6-05, Monthly Debt Obligations (student loans), Fannie Mae. Accessed September 27, 2026.
- Selling Guide B3-6-02, Debt-to-Income Ratios, Fannie Mae. Accessed September 27, 2026.
- Selling Guide B3-3.3-03, Employment Offers or Contracts, Fannie Mae. Accessed September 27, 2026.
- Selling Guide B7-1-01, Provision of Mortgage Insurance, Fannie Mae. Accessed September 27, 2026.
- Loan Product Advisor Feedback Message Updates: Student Loan Payment Update (effective September 28, 2025), Freddie Mac. Accessed September 27, 2026.
- What Is Private Mortgage Insurance? ($30 to $70 per month per $100,000; 3% down under Home Possible), Freddie Mac (My Home). Accessed September 27, 2026.
- When can I remove private mortgage insurance (PMI) from my loan?, Consumer Financial Protection Bureau. Accessed September 27, 2026.
- What happens when a mortgage lender checks my credit?, Consumer Financial Protection Bureau. Accessed September 27, 2026.
- Primary Mortgage Market Survey (30-year fixed average of 7.03% as of September 24, 2026), Freddie Mac. Accessed September 27, 2026.
- Truist Doctor Loan (deferred student loan exclusion), Truist. Accessed September 27, 2026.
- Doctor Loan (eligible degrees; credit), Bank of America. Accessed September 27, 2026.
Disclaimer: This article is for educational purposes only and does not constitute financial or mortgage advice. Rates, program terms, and eligibility requirements change frequently and vary by lender, state, and individual borrower profile. Always verify current terms directly with lenders before making mortgage decisions. MedMoneyGuide has no affiliate or advertising relationships with the companies it covers.
About the Author
Joshua Dunigan, DO | Family Medicine Resident & Founder
I'm a family medicine resident physician at Broadlawns Medical Center in Des Moines, Iowa (class of 2027). I founded MedMoneyGuide to give physicians specialty-specific financial guidance, with sources you can check.