I have learned way more in the past few days about mortgages than I wanted. In the past, medical students who were under contract at a residency program could get a mortgage for 0% down, 0 mortgage insurance, no prepayment penalty, and at current market rates.
Unfortunately, this exact mortgage is all but extinct with the ongoing financial downturn. The cashier at McDonald's who said his salary was $100,000 ruined it for all of us. That said, there are a few options for those of us with huge medical student loans and little-to-no money down. Here are the current options:
1. Huntington Bank As long as they have a branch where you want to move you are set. They will give you a loan exactly as stated above, given you have a decent credit score. Two notable exceptions: Chicago and Miami, where they do not have banks. This was the company that I went the furthest with, unfortunately I am moving to Chicago.
2. Suntrust Bank Same as above as far as I can tell. Only works if you are moving to a state in the southeast.
3. Other Banks Several other banks have physician mortgage programs that do not count deferrable student loans against you and have some other perks. Unfortunately, most/all require a standard down payment 3.5% for FHA, 5% for conventional loans. Most do not require mortgage insurance, but instead they charge an inflated interest rate (by 0.5% typically). An example of a bank that does this is 5/3rd bank and Bank of America.
Mortgage Brokers Be careful using mortgage brokers as they will either want a set amount money at closing (in exchange for them referring you to a bank) or the bank will significantly raise your rates.
A couple of other considerations: compare packages from multiple banks--you may find that a standard loan will result in reduced monthly payments. Best of luck!
