Most resident physicians find themselves in a very unique position. They come out of medical school with a lot of debt – an average of nearly $200,000. Most of them have little savings and no income. If they walked into a bank to get a regular mortgage loan, they wouldn’t be able to meet the criteria because they wouldn’t be able to show six months worth of stable income.
However, there is now a special loan program that helps them to buy a home. Resident physician loans allow them to get a quick (albeit super expensive) mortgage, often with no money down. They end up paying a point or two extra in interest but are able to qualify, as long as they have a contract with an employer.
Can You Get Resident Physician or Doctor Loans With A 650 Credit Score?
That all brings us to the real question which is whether you can qualify for these loans with a credit score of 650. The quick answer is yes. Many (but not all) lenders will be willing to work with you in that credit range. However, you are looking at a pretty expensive loan. You’ll end up paying two to three percentage points more in interest and that will really stack up over a 10,15, or 30 year period. On a 30 year mortgage of $300,000, the difference between 4% and 6% is $130,000.
I personally wouldn’t recommend wasting that kind of money. I would rent for six months when you could qualify for a traditional, conventional loan or FHA loan so you can save yourself that money. As an alternative, make sure that you can get out of your physician loan early so you can refinance in six months. Work on your credit in the meantime – within six months you can really move the stick with your credit score and that will make a huge difference in the cost of your loan.