The BMO Bank physician loan is a great way for doctors and dentists to buy a home with little money down. It works well for new doctors, but they allow established doctors to use the program as needed.
Here’s everything you must know about the BMO Bank physician loan program.
About BMO Bank
BMO Bank is the 8th largest bank in America, providing personal and commercial banking products to 12 million customers. They’ve been in business since 1817 and have a great doctor and dentist loan program to help medical professionals secure mortgage financing.
About BMO Bank Physician Loans
BMO Bank offers physician loans to doctors in all phases of their careers, including residents, fellows, and new and established doctors.
Most banks don’t provide physician loans to established doctors, but BMO Bank does, with a higher down payment than traditional doctors.
Like most banks, they offer flexibility regarding your debt-to-income ratio to make getting approved for a mortgage with medical school debt easier. In addition, the BMO Bank physician loan program is available as a purchase or refinance program.
How BMO Bank Physician Loans Work
BMO Bank offers up to 100% financing to qualified physicians and dentists, allowing them to borrow as much as $2 million, depending on what they can afford. In addition, BMO Bank has relaxed guidelines to help doctors qualify even if they have a large amount of student debt or little money to put down on the home.
The down payment varies based on how much you borrow and where you’re at in your career. If you’re a resident, fellow, or new doctor with less than ten years of experience, you’ll need the following down payments:
- 0% on up to $1 million
- 5% on $1 million to $1.5 million
- 10% on $1.5 to $2 million
If you’re an established doctor with 10+ years of experience and still need the flexibility of a physician loan, you may qualify with a 10% down payment, no matter your loan amount.
Who Is Eligible for BMO Bank Physician Mortgage Loans?
Each bank offers its physician loans to different types of doctors and medical professionals. BMO Bank offers its program to the following:
You can be in your residency, fellowship, or a practicing doctor. The earlier in your career, you apply for the program, the less money you must put down, but investing more money in your home from the start is a good idea.
Qualifying Requirements for BMO Bank Physician Mortgages
The BMO Bank physician mortgage program is available in all states except New York. To qualify, you must meet the following:
- You must work in an eligible profession – To qualify, you must be a resident, fellow, or practicing doctor with the abovementioned credentials. Unfortunately, if you work in any other medical profession, you wouldn’t be eligible for this program.
- You must be employed or have an employment contract – If you have yet to start your position, you must have an employment contract that begins within 90 days.
- The property must be your primary residence – You can use the BMO Bank physician program on a single-family, condo, or 2-unit property, but you must live there. Second, vacation or investment homes aren’t eligible.
Pros and Cons of BMO Physician Loans
Understanding the pros and cons of the BMO Bank physician loan program can help you compare it to other options to make the right choice.
- No PMI – Even if you borrow 100% of the purchase price, you won’t pay Private Morgage Insurance. This can save borrowers hundreds of thousands of dollars by not paying PMI.
- Flexible underwriting guidelines – BMO Bank offers flexible guidelines to help doctors and dentists secure the financing they need but may not yet have the proof they can afford. You’ll need proof of future income from your current or upcoming position and the ability to cover your obligations, but they are flexible with student loan payments.
- Open to many property types – Many physician loan programs are only open to single-family homes, but BMO Bank allows it on condos and 1 to 2-unit properties, too, as long as it’s your primary residence.
- Closing cost discounts available – BMO Bank offers physicians a $500 closing credit if they set up autopay for their mortgage payments. The autopay must be from a qualified BMO Bank account.
- Qualify before starting your position – You can get approved and close your physician loan if you have an employment contract with a start date of within 90 days.
- Limited to certain types of doctors – The BMO Bank physician loan is only open to MDs, DOs, DMDs, or DDSs. Therefore, if you work in another specialty, you may have to look elsewhere for a physician loan.
- Only available on primary residences – You cannot use the loan program to buy a second or investment home. This is because BMO Bank takes a risk lending such large loan amounts with low down payments that they only allow primary residences to reduce their risk.
- Easy to overbuy – The relaxed guidelines make it easy to overspend. However, just because you qualify doesn’t mean you can or should afford the higher loan amount.
- No cash-out refinance option – The only refinance option for the BMO Bank physician mortgage is a rate/term refinance for doctors who need different terms on a current loan.
How to Apply for a BMO Bank Physician Mortgage
To apply for a BMO Bank physician mortgage, follow these simple steps:
1. Call a mortgage banker at BMO Bank
BMO Bank doesn’t have an online application process for the physician loan. Instead, call 1-888-482-3781 to speak to a mortgage banker. You’ll discuss your financing needs and provide the banker with your personal details, including:
- Address and phone number
- Birthdate and Social Security number
- Property information and value
- Loan amount
2. Prepare your documentation
To apply for a BMO Bank physician mortgage, you must provide proof of your income, employment, and assets. Having the following paperwork ready can speed the process along.
- Paystubs if you’re already employed
- Employment contract if you haven’t started yet
- Tax returns if you’re a practicing doctor
- Bank statements to prove the down payment funds
- Real estate contract if you have one
- Government-issued ID
3. Review the terms and accept the loan
The final step is to review the terms offered to you and accept the loan. Then, you’ll attend a loan closing and sign the paperwork. Before closing, understand the loan terms, payment, and mortgage rate. BMO Bank doesn’t charge a prepayment penalty on their doctor loans, so you don’t have to worry about paying it off early if you can.
Discover The Best Lenders 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!
Discover The Best Lenders
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!
BMO Bank Physician Mortgage Alternatives
BMO Bank isn’t the only bank that offers physician mortgages. Here are some other banks to consider.
1. Huntington Bank
Huntington Bank offers a robust physician loan program. However, doctors and dentists need excellent credit and mortgage reserves (liquid assets) to qualify. They have the same down payment requirements as BMO Bank and offer loans in fixed and adjustable rate terms with no PMI or prepayment penalties.
KeyBank is one of the few banks that offer physician loans on second and primary homes. They provide loans up to $3.5 million, sometimes with no down payment. In addition, KeyBank doesn’t charge PMI, has prepayment penalties, and has fixed or variable loan options.
3. Flagstar Bank
Flagstar Bank has a loan program geared toward professionals, which they include doctors in, so technically, it’s not a physician loan, even though doctors can use it. The program is also open to nurses and other medical professionals, but you must be within the first ten years of your career.
In addition, Flagstar requires a 720 credit score for no down payment on loans up to $1 million and a low down payment on loans up to $1.5 million, their maximum. However, unlike their competitors, Flagstar only offers adjustable rate loans for doctors.
Physician loans can be a great way to secure the home you want before you’re established in your career. Here are a few more questions people have about the program.
Can You Refinance With the BMO Bank Physician Loan Program?
You can refinance with the BMO Bank physician loan program, but only a rate and term refinance. You can’t refinance for a loan amount higher than you owe and use the cash for other purposes.
What Should Your Credit Score Be for a Physician Loan?
Most lenders like credit scores of 700 or higher for physician loans, but each bank differs. The more money you have to put down on the home, or the lower your DTI is, the easier it is to qualify if you have less than perfect credit.
Do Doctors Get Better Mortgage Rates?
Doctors don’t get better mortgage rates than anyone else. Instead, they may pay higher rates because the risk is higher for banks. Lending $1 million+ with no down payment increases lenders’ risk, but they do it for doctors with high-income potential while charging higher interest rates.