Physician Loan vs. FHA loan for duplex/triplex

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Physician Loan vs. FHA loan for duplex/triplex

Wendell Carmona
Member since 2019 · 3 posts · 3 votes

Good Evening everyone!

I have finally finished my residency and will be starting my first job in Buffalo, NY this upcoming August. I am interested in purchasing my first home now that I am no longer a student/resident and am having troubling deciding which type of loan to use. Ideally, I will be using the house hacking method so I would like to purchase a duplex/triplex. If anyone could answer these questions for me, it would really help in my decision:

Can a physician loan be used to finance the purchase a multi-family home?

From my understanding, you are only required to live in one of the units for one year through the FHA loan. Does the same apply for the physician loan or does it have to be your primary residence for the life of the loan?

Does a physician loan also finance possible renovations along with the cost of the house like a FHA 203(K)?

Can a FHA loan be used to buy your second/new primary residence?

Are there better options where I can put less than 5-10% down?

Thanks for the help! Also forgive me if any part of my limited knowledge on the matter is incorrect!

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Aaron Hunt
All Over, USA · Member since 2017 · 689 posts · 756 votes
6y

I’m a physician as well. Finished residency in 2018. Had bought two homes during residency with 5% down each. Kept them both and due to market appreciation they are now cash-flow rentals with $100k in equity each. Then used my sign-on bonus to buy our 3rd rental.

For my primary, I went with Fulton Bank, they gave me up to $1.5 million with 0% down, No PMI, and a 3.5% rate.

Would be awesome to have scaled up into a multi-fam, just wasn’t in the cards for us though.


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  • Ujwal Velagapudi
    Investor/Agent/Entrepreneur · Dallas, TX · Member since 2016 · 464 posts · 564 votes
    6y

    Congrats Wendell, that's super exciting! A lot of my friends are in the same boat, residents or just about to start as an attending. I'm actually curious to see what others have done as well, but I do think there are lenders who will provide 0% down options per the loan but just dependent on the lender's criteria. I can't think of anyone I know that's actually used it with no money down. As for multi-units, this seems to say it's possible: https://semiretiredmd.com/doctor-loan-finance/

    0Reply
  • Matthew PorcaroBusiness Member
    Lender · Long Island, NY · Member since 2016 · 456 posts · 336 votes
    6y
    Originally posted by @Wendell Carmona:

    Good Evening everyone!

    I have finally finished my residency and will be starting my first job in Buffalo, NY this upcoming August. I am interested in purchasing my first home now that I am no longer a student/resident and am having troubling deciding which type of loan to use. Ideally, I will be using the house hacking method so I would like to purchase a duplex/triplex. If anyone could answer these questions for me, it would really help in my decision:

    Can a physician loan be used to finance the purchase a multi-family home?

    From my understanding, you are only required to live in one of the units for one year through the FHA loan. Does the same apply for the physician loan or does it have to be your primary residence for the life of the loan?

    Does a physician loan also finance possible renovations along with the cost of the house like a FHA 203(K)?

    Can a FHA loan be used to buy your second/new primary residence?

    Are there better options where I can put less than 5-10% down?

    Thanks for the help! Also forgive me if any part of my limited knowledge on the matter is incorrect!

    Wendell, 

    Congrats on the completion of your residency! That's amazing and I'm sure you're excited for the next step in your career. My best friend is in the middle of his residency, and actually we've spoken about his plans for a house when he gets out. 

    I'm not quite sure what you're referring to regarding a "physician loan". Is this a unique mortgage product only for physicians? What are the terms?

    In any case, ANYONE can use an FHA loan, so long as they don't have one already.

    Buffalo NY would be an awesome market to use an FHA 203k or other renovation loan in. Buffalo is largely zoned for multi-family, which with an FHA loan you can buy up to 4 units, and you will be able to find some distressed properties that you can also build equity to during the process of the rehab.

    Then, rent out 2 or 3 other units to live effectively mortgage free!

    Hope this helps, let me know if you have any other questions!

    The 203k Way
    WebsiteView Page
    0Reply
  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    6y

    I am with @Matthew Porcaro regarding the "physician loan". What does that loan program entail? Never heard of it and would be interested to see if it could potentially help one of my clients down the road. 

    0Reply
  • Brandon Kmiotek
    Rental Property Investor · Buffalo, NY · Member since 2019 · 26 posts · 9 votes
    6y

    @Wendell Carmona

    Congratulations and welcome to Buffalo! I myself just recently purchased a 4unit using an FHA loan. 2 units still need to be rehabbed over time but I'm going to let the asset pay for the renovations. I purchased the property in the West Side of Buffalo which is considered to be an up and coming area. Feel free to message me personally and I can help with areas you would like to purchase. I'm in the process of getting my real estate license so I can't help buy a house but I do know a few good agents! Same with contractors and lending options!

    0Reply
  • Corby GoadeBusiness Member
    Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
    6y

    You have to live in a house purchased with an FHA loan for at least a year. You have a lot of specific question here that would be best for your lender- I don't know anything about a Physician Loan.

    That said- you need to keep in mind that you will need to pay PMI regardless of the loan type until you have 20% equity in the property. So- in order to get to that point quickly, I'd look for a property that needs some updating that could give you some quick equity. Make sure your lender will allow you to drop the PMI with an appraisal and that they will not require a refi to eliminate it.

    Best of luck!

    0Reply
  • Aaron Hunt
    All Over, USA · Member since 2017 · 689 posts · 756 votes
    6y

    I’m a physician as well. Finished residency in 2018. Had bought two homes during residency with 5% down each. Kept them both and due to market appreciation they are now cash-flow rentals with $100k in equity each. Then used my sign-on bonus to buy our 3rd rental.

    For my primary, I went with Fulton Bank, they gave me up to $1.5 million with 0% down, No PMI, and a 3.5% rate.

    Would be awesome to have scaled up into a multi-fam, just wasn’t in the cards for us though.


    3Reply
  • Aaron Hunt
    All Over, USA · Member since 2017 · 689 posts · 756 votes
    6y
    Originally posted by @Corby Goade:

    You have to live in a house purchased with an FHA loan for at least a year. You have a lot of specific question here that would be best for your lender- I don't know anything about a Physician Loan.

    That said- you need to keep in mind that you will need to pay PMI regardless of the loan type until you have 20% equity in the property. So- in order to get to that point quickly, I'd look for a property that needs some updating that could give you some quick equity. Make sure your lender will allow you to drop the PMI with an appraisal and that they will not require a refi to eliminate it.

    Best of luck!

    Physician loans don't have PMI.

    0Reply
  • Aaron Hunt
    All Over, USA · Member since 2017 · 689 posts · 756 votes
    6y
    Originally posted by @Wendell Carmona:

    Good Evening everyone!

    I have finally finished my residency and will be starting my first job in Buffalo, NY this upcoming August. I am interested in purchasing my first home now that I am no longer a student/resident and am having troubling deciding which type of loan to use. Ideally, I will be using the house hacking method so I would like to purchase a duplex/triplex. If anyone could answer these questions for me, it would really help in my decision:

    Can a physician loan be used to finance the purchase a multi-family home?

    From my understanding, you are only required to live in one of the units for one year through the FHA loan. Does the same apply for the physician loan or does it have to be your primary residence for the life of the loan?

    Does a physician loan also finance possible renovations along with the cost of the house like a FHA 203(K)?

    Can a FHA loan be used to buy your second/new primary residence?

    Are there better options where I can put less than 5-10% down?

    Thanks for the help! Also forgive me if any part of my limited knowledge on the matter is incorrect!


     See my post above. Also check WCI for more on this. Sure, you can buy a multi-fam up to 4 unit. Don’t need to live there life of loan.

    0Reply
  • Aaron Hunt
    All Over, USA · Member since 2017 · 689 posts · 756 votes
    6y
    Originally posted by @Matthew Porcaro:
    Originally posted by @Wendell Carmona:

    Good Evening everyone!

    I have finally finished my residency and will be starting my first job in Buffalo, NY this upcoming August. I am interested in purchasing my first home now that I am no longer a student/resident and am having troubling deciding which type of loan to use. Ideally, I will be using the house hacking method so I would like to purchase a duplex/triplex. If anyone could answer these questions for me, it would really help in my decision:

    Can a physician loan be used to finance the purchase a multi-family home?

    From my understanding, you are only required to live in one of the units for one year through the FHA loan. Does the same apply for the physician loan or does it have to be your primary residence for the life of the loan?

    Does a physician loan also finance possible renovations along with the cost of the house like a FHA 203(K)?

    Can a FHA loan be used to buy your second/new primary residence?

    Are there better options where I can put less than 5-10% down?

    Thanks for the help! Also forgive me if any part of my limited knowledge on the matter is incorrect!

    Wendell, 

    Congrats on the completion of your residency! That's amazing and I'm sure you're excited for the next step in your career. My best friend is in the middle of his residency, and actually we've spoken about his plans for a house when he gets out. 

    I'm not quite sure what you're referring to regarding a "physician loan". Is this a unique mortgage product only for physicians? What are the terms?

    In any case, ANYONE can use an FHA loan, so long as they don't have one already.

    Buffalo NY would be an awesome market to use an FHA 203k or other renovation loan in. Buffalo is largely zoned for multi-family, which with an FHA loan you can buy up to 4 units, and you will be able to find some distressed properties that you can also build equity to during the process of the rehab.

    Then, rent out 2 or 3 other units to live effectively mortgage free!

    Hope this helps, let me know if you have any other questions!

    Yes, normally, 0-5% down, no PMI.

    1Reply
  • Bill Goodland
    Rental Property Investor · Allentown PA, United States · Member since 2016 · 567 posts · 442 votes
    6y

    @Wendell Carmona congrats on finishing residency. I'm a PA myself and work with a bunch of docs. It really depends on your situation. If you wanna househack a triplex let's say, I'd probably use an FHA and go as big as possible. If you wanna do a live in flip on an expensive SFR, I'd use the physician loan and use whatever cash you have for the rehab. I'd avoid the headaches associated with a 203k loan

    0Reply
  • José Reyes
    Realtor · Orlando, FL · Member since 2020 · 8 posts · 1 vote
    6y

    @Michael Noto

    Found this on Doctors mortgages

    https://www.leveragerx.com/app/mortgage-form/new/loan-info?utm_medium=ad&utm_source=google-search&utm_campaign=ppc&utm_content=287043641716&utm_term=doctors%20loan%20mortgage&gclid=EAIaIQobChMI5rC67ZGt6QIV5QiICR37kArhEAAYAyAAEgJXa_D_BwE

    0Reply
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