Homeownership can feel inaccessible to medical professionals with significant debt and minimal employment history due to the years they’ve spent training and studying.
However, this sacrifice doesn’t come without its benefits. Particularly in the mortgage industry, healthcare professionals have access to low down payment options that the general public doesn’t.
These low-down-payment options are typically referred to as physician mortgage loans. Not all lenders advertise these loans as official products, but a knowledgeable loan officer will be able to help you find the best option for your financial needs.
If it’s your residency program or your brand new private practice which brings you to Alabama, you’ll be one of the almost 5 million residents who call the state home.
Alabama is a state steeped rich in history and offers its residents many unique opportunities for a great quality of life.
Whether you choose the big city of Birmingham, the vibrant college towns, or the quiet life on the coast, Alabama has something to offer for everyone.
We’ve zeroed in on the best physician mortgage loans in Alabama to help you purchase a home you love.
9 Best Alabama Physician Home Loan Lenders
Here are the top physician mortgage loan lenders in AL:
- BMO Bank
- Citizens Bank
- Evolve Bank & Trust
- First Horizon Bank
- Regions Bank
- Truist Bank
- US Bank
Discover The Best Lenders in Alabama
Answer just a few questions about your career, where you're buying, and how much you want to borrow. Our service will then show you the exact programs you're eligible for from vetted physician loan specialists who will guide you through every step of the process – obligation-free!
1. BMO Bank
- BBB Grade: A+
- JD Power Score: 805
BMO Bank (formerly BMO Harris Bank) extends its physician loan program to medical doctors (MD), doctors of osteopathic medicine (DO), and dentists (DDS/DMD). Residents and fellows are also included.
There isn’t an age limit for borrowers, but doctors who have been practicing for more than 10 years will be required to put at least 10% down regardless of the loan amount.
BMO offers three financing options in Alabama:
- 100% financing up to $1 million
- 95% financing for $1 – $1.5 million
- 90% financing for $1.5 – $2 million
All down payment options exclude private mortgage insurance (PMI).
Loans must be used to purchase or rate/term refinance a duplex, single-family home, condominium, or townhouse. Second homes and investment properties are excluded.
Student loans will also be considered differently than conventional loan products.
The bank doesn’t specify exactly how it calculates the debt-to-income (DTI) ratio, but it will use flexible underwriting guidelines to determine if you qualify.
Physicians who have not yet started working can use an employment contract future dated within 90 days of closing as proof of earning potential.
Because physician loans accept employment contracts instead of requiring work history, they can be a particularly worthwhile mortgage product for professionals who are just starting out or relocating to accept a job offer.
2. Citizens Bank
- BBB Grade: A+
- JD Power Score: 818
Citizens Bank’s Doctor Mortgage Loan program will provide up to 95% financing to medical doctors, doctors of osteopathic medicine, and dentists who are still within the first 10 years of their careers.
Current interns, residents, and fellows are also eligible for the program but may be subject to different loan limits.
The program accepts 5% down payments on loans up to $850,000 or 11% on loans up to $1 million.
However, medical residents with an educational license will be limited to a maximum loan amount of $600,000. Unlicensed medical residents can borrow up to $400,000.
All qualified borrowers will have PMI waived.
Borrowers can choose between fixed-rate or adjustable-rate mortgage (ARM) products with loan terms of up to 30 years.
3. Evolve Bank & Trust
- BBB Grade: A+
- JD Power Score: N/A
Evolve Bank & Trust’s physician loan program is open to the following medical professionals:
- Chiropractor (DC)
- Dental Surgeons (DDS)
- Dentists (DMD)
- Medical Doctors (MD)
- Nurse Anesthetist (CRNA)
- Nurse Practitioner (NP)
- Optometrist (OD)
- Pharmacists (RPH/PharmD)
- Physician’s Assistant (PA)
- Podiatrist (DPM)
- Veterinarians (DVM)
The program does not advertise an age limit for borrowers. If you qualify for the program, it will provide up to $1 million in financing without a down payment.
Loans up to $1.25 million require at least a 5% down payment. Loans up to $1.5 million require at least 10% down, but you can borrow up to a whopping $2 million with 15% down.
None of these down payment options require PMI and physicians can qualify for financing with an employment contract dated within 90 days of the projected closing date.
4. First Horizon Bank
- BBB Grade: A+
- JD Power Score: 825
First Horizon Bank doesn’t publicize a lot of information about its home financing options for medical professionals because it wants borrowers to contact mortgage originators for a personalized shopping experience.
However, we do know a few key details about its program. First, it’s exclusive to medical doctors, doctors of osteopathic medicine, podiatrists, and oral surgeons. Residents are also included.
Second, it will provide a maximum loan amount of $2.5 million.
Some loan amounts will be eligible for 100% financing, but borrowers will need to have a 670 minimum credit score and a First Horizon bank account enrolled in AutoPay for monthly payments.
5. Flagstar Bank
- BBB Grade: A-
- JD Power Score: 781
Flagstar Bank offers one of the most inclusive doctor loan programs on the market. Instead of calling it a physician mortgage loan, it advertises its specialized mortgages as Professional Loans. It is limited to borrowers within the first 10 years of their careers.
The Professional Loan program is open to the following designations:
- ATP Pilot
- Certified Public Accountant (CPA)
- Clinical Nurse Specialist
- Doctor of Dental Medicine (DMD)
- Doctor of Dental Surgery (DDS)
- Doctor of Ophthalmology (MD)
- Doctor of Optometry (OD)
- Doctor of Osteopathy (DO)
- Doctor of Pharmacy (PharmD)
- Doctor of Podiatric Medicine (DPM)
- Medical Doctor (MD)
- Medical Resident (Educational License)
- Nurse Anesthetist (CRNA)
- Nurse Practitioner (NP)
- Physician Assistant (PA)
- Registered Nurse (RN)
- Veterinarian (DVM)
Borrowers must have a 720 minimum credit score to qualify for financing.
Loans up to $1 million don’t require a down payment, but larger loans will require an unspecified low down payment amount. The program’s maximum loan amount is $1.5 million.
All loans regardless of the down payment amount exclude PMI.
It’s important to note that all of Flagstar Bank’s Professional Loans are adjustable-rate mortgages (ARMs), which means the interest rate will fluctuate over the loan term.
The program will also accept interested-party contributions or gift funds. These funds may be applied to down payments, closing costs, or required cash reserves.
- BBB Grade: A+
- JD Power Score: 794
KeyBank tailors its Medical Professional Mortgage program to the needs of medical doctors and dentists. It doesn’t place an age limit on the program, but retired physicians aren’t included.
Its lenders will provide personalized service so they can thoroughly address questions and find a loan product that best fits medical professionals’ financial situations.
Unlike many other physician loan programs, KeyBank loans may be used to purchase or refinance a primary residence or second home.
Attached and detached single-unit family homes, condominiums, and townhouses are eligible for financing.
KeyBank is particularly generous with its maximum loan amount compared to other lenders.
The program will lend up to $3.5 million to qualified borrowers, but the exact financing options vary based on the applicant’s credit profile and geographic location.
Like many physician loan programs, it does not require primary mortgage insurance before you reach 20% equity.
7. Regions Bank
- BBB Grade: B+
- JD Power Score: 836
Regions Bank’s Doctor Mortgage Program is open to medical doctors, doctors of osteopathic medicine, and dentists, including current residents and fellows.
Qualified applicants can borrow up to $750,000 without a down payment or up to $1 million with only a 5% down payment. All down payment options exclude PMI.
Loans may only be used to purchase or refinance a primary residence. The program will also make special credit allowances for borrowers with deferred student loan debt.
Incoming residents and doctors relocating for new employment can close on their loans before they move with the Loan Application Status Portal.
If underwriting requests documents or clarification, it can easily be done online, which can be an added benefit for medical professionals with hectic schedules.
8. Truist Bank
- BBB Grade: A+
- JD Power Score: N/A
Truist Bank will lend up to $2 million to qualified physicians and dentists within 15 years of beginning their careers. Current residents are also eligible.
Early-career physicians who have been practicing for less than 10 years can secure financing without a down payment, but more experienced providers may be asked to put down at least 10%.
Student loans aren’t completely disregarded, but underwriting is more lenient than with a conventional mortgage.
Physicians who already own a home can leverage their home equity to pay off debts with a cash-out refinance. Cash-out refinances can provide the owner with up to 80% of the property’s appraised value.
Most of the funds must go to debt repayment, but borrowers can take up to $50,000 in cash.
9. U.S. Bank
- BBB Grade: B+
- JD Power Score: 820
U.S. Bank extends its physician mortgage loan program to medical doctors and doctors of osteopathic medicine with a minimum credit score of 710. Current residents are also included.
The program will lend up to $2.5 million. The expected down payment will depend on the total loan amount.
Loans up to $1 million will require a 5% down payment. Loans up to $1.25 million will require a 10% down payment and loans up to $1.5 million will require a 15% down payment.
Borrowers on an income-driven repayment plan will have their monthly payment amount used to calculate the DTI ratio. Borrowers with deferred student loans will have 2% of their loan balance used to calculate the DTI ratio.
Platinum Checking Account holders can qualify for a 0.25% lender credit up to $1,000, which can reduce closing costs.
How Physician Mortgage Loans Work in Alabama
Physician loans are designed to help high-earning professionals navigate the home-buying process while they’re still early in their careers. Many early career medical professionals are shackled by student loan debt while living on lower salaries than their more senior colleagues.
Under these conditions, it can be difficult to qualify for a conventional mortgage, but that doesn’t mean physicians need to delay their wishes of starting a family, settling down, and becoming fixtures in their communities.
Physician mortgage lenders will work with borrowers who hold qualifying degrees. Most programs are open to medical doctors, doctors of osteopathy, and dentists, but some programs include advanced practice nurses, physician assistants, accountants, and lawyers.
- Little to No Down Payment: If you have a qualifying degree, you’ll be able to secure a home loan with little to no down payment.
- No PMI: Unlike conventional loan programs, you won’t be required to pay monthly private mortgage insurance (PMI), which can keep your monthly payments lower than a conventional mortgage of the same amount.
- Higher Financing Amounts: Physician loans are also non-conforming loans, which means they’re not restricted to the same loan limits as conventional mortgages. In Alabama, the conforming loan limit is $647,200 for a single-family home. Any loan that exceeds this amount is considered a jumbo loan. Physician loans will often provide 100% financing on loans up to $750,000 and low down payment options for loans of more than $1 million. Some physician loan programs will even provide home loans up to $3.5 million.
- New Home or Refinance: Doctor mortgage loans are limited to the purchase of a new home or refinance of a property you are using as a primary residence––second homes and rental properties are often excluded, so it’s not always the best option if you’re looking to grow your real estate portfolio.
Credit unions and mortgage lenders are willing to be more lenient with high-earning professionals because there is a reduced likelihood of default, more job security, and a great potential for bringing more business to the bank.
Pros & Cons
Weighing the pros and cons can help you choose the best mortgage loan program in Alabama.
- No private mortgage insurance: Physician mortgage programs don’t require private mortgage insurance, no matter how much your down payment is.
- Flexible down payment options: Many doctor mortgage programs will provide 95–100% financing, so you won’t be required to have a huge down payment saved.
- Can be used to refinance: Physician loan programs can be used to refinance a primary residence you already own.
- Lenient on student loan debt: Underwriting will make special considerations for borrowers with high student loan debt. In some cases, they’ll fully exclude deferred student loan debt or they’ll use your monthly income-driven repayment amount to calculate your DTI ratio.
- Purchase before you start working: Many physician mortgage lenders will accept employment contracts as proof of earning potential.
- Can’t be used for a second home: Physician mortgage loans are typically limited to the purchase or refinance of a primary residence––second homes, rental properties, and investment properties are not eligible.
- High monthly mortgage payment: Because physician mortgages aren’t subject to the same loan limits as many conventional loans, it can be easier to borrow loan amounts outside of your means.
- Mortgage rates: It’s not always the case, but in some cases, doctor loans have higher interest rates than conventional loans due to the lower down payment amounts.
Frequently Asked Questions
What credit score do you need for a physician loan in Alabama?
You need a credit score of around 700 to qualify for a physician loan. Some programs may work with lower credit scores if you can afford a larger down payment or provide bank statements that demonstrate cash reserves.
Do physician loans in Alabama have a higher interest rate?
Physician loans don’t always have a higher interest rate. In some cases, physician loans will have a higher interest rate to compensate for the lender’s additional risk of financing a jumbo loan without a down payment, but other times, physician loans have competitive mortgage rates.
What is the best way to get a physician loan in AL?
The best way to get a physician loan is to discuss your mortgage options with a broker, financial advisor, or loan officer.
These professionals will be able to review your financial profile carefully to help you improve your cases of approval or recommend a loan that best fits your budget. Most medical doctors and residents are eligible for the typical physician loan program, but some loan lenders are more inclusive than others.
Working with a loan officer who can efficiently vet many of the mortgage products on the market can help you find programs designed for the needs of a variety of healthcare professionals.
What is the difference between a fixed-rate and an adjustable-rate mortgage?
The difference between a fixed-rate and adjustable-rate mortgage is that fixed-rate mortgages maintain the same interest rate from when you apply for the loan, whereas adjustable-rate mortgages have interest rates that reset throughout the loan term.
Adjustable-rate mortgages typically start with an introductory interest rate that eventually expires after 3, 5, 7, or 10 years. After the introductory period, the interest rate will reset at the interval outlined in your mortgage program.
Some programs reset every year, whereas others reset quarterly or every other year.
What debt-to-income ratio do I need for a doctor mortgage loan in AL?
You need a debt-to-income ratio of 50% or less to qualify for a doctor mortgage loan. Conventional, VA, and FHA loans typically look for debt-to-income ratios of less than 43%, so doctor mortgage loans provide some leeway in that department.
Physician mortgage loans also often exclude student loan debt or use your income-driven repayment amount, which can further reduce your DTI ratio.
Who is a Physician Loan in Alabama Best For?
Knowing you’re not alone in your financial situation can help you decide if a physician loan is a right choice for you. We’ve come up with a few examples of people that can benefit from a physician loan in Alabama.
Self-employed dentists and veterinarians
At least half of practicing dentists and 42% of veterinarians are private practice owners.
Launching and maintaining a private practice is expensive with many physicians having to pay the overhead costs of rent, insurance, hiring a supervisory physician, and maintaining payroll.
These significant costs can make it difficult to save for a down payment or meet the other requirements of a conventional mortgage.
Self-employed physicians are often eligible for physician loans with two years of tax returns.
Recent medical school graduates, medical residents, and other healthcare professionals with significant student loan debt
Student loan debt can skew the debt-to-income ratio of even the highest-earning medical professionals. While conventional mortgages will take your student loan payments at face value, physician loan programs have a few different approaches.
Some loan programs will completely exclude all student debt, while others only exclude student loan debt that’s deferred for twelve months or more.
Some other lenders will use your monthly income-driven repayment amount whereas others will use a small percentage of your total loan balance to calculate your DTI ratio.
Physicians shopping around for the best mortgage rates
Homeownership is a costly endeavor no matter how you slice it, but the costs can vary significantly across lenders. Shopping around can ensure you get the best financing options for your budget.
Some lenders will provide rate discounts, lender credits, or seller-paid closing costs depending on your eligibility.
Working with a loan officer can help you identify the physician loan programs that accept your medical designation and offer the most competitive down payment options.
Typically, they’ll provide you with a loan estimate form that outlines all the expected costs of the mortgage program you’re interested in.
Once you’ve selected a loan program and it’s been approved, you’ll receive closing disclosures, a five-page document that outlines the exact costs of closing on your home, including your monthly payments.
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