Physician Mortgage in Michigan: Buy with 0% Down Despite Student Loans

A new resident came to us three months before she started her residency at a Michigan hospital, carrying $240,000 in student loan debt and a signed employment contract that hadn't paid her a single dollar yet. She assumed buying a home was years away. It wasn't. A physician loan let her close before her first paycheck, using the same contract that made a conventional lender nervous as proof she could actually afford the payment.

Physician loans exist because doctors are an unusual credit risk: high future earning potential, heavy student loan debt, and an income history that often doesn't look like a typical borrower's. Conventional underwriting wasn't built for that combination, so lenders built a separate program around it.

What Makes a Physician Loan Different

What makes a physician loan different comes down to three things. First, down payment: many physician loan programs offer 0% down, or something close to it, without requiring private mortgage insurance even at high loan-to-value ratios. That's a real departure from conventional financing, where anything above 80% financing typically means PMI. Second, loan limits: physician loans often allow higher loan amounts than a standard conforming loan, which matters in higher-cost Michigan markets or for larger homes near major hospital systems. Third, and most relevant for anyone fresh out of medical school, is how student loans get counted.

How Student Loans Are Actually Counted

Under standard mortgage underwriting, a lender calculates your debt-to-income ratio using your full student loan payment, even if you're on an income-driven repayment plan showing a payment far lower than what a standard amortization schedule would produce. That inflated number can knock an otherwise qualified physician out of conventional financing entirely. Physician loan programs typically use your actual reported student loan payment, or in some cases exclude deferred loans altogether if payments haven't started yet, which changes the qualifying math substantially.

The employment contract does the heavy lifting that pay stubs and tax returns normally would. Most physician loan programs allow you to qualify off a signed offer letter or employment contract, as long as employment starts within a defined window, usually 60 to 90 days of closing. That's how our client closed on her home before residency started: the contract itself was the income documentation, not two years of a job that didn't exist yet.

Think of it less like a loophole and more like a bridge. A physician loan is built to carry you across the gap between having a contract and having two years of pay stubs proving it, a gap every doctor passes through and few other professions navigate quite the same way. The bridge isn't free forever, though: once you're a few years into practice with a full tax return history, a conventional loan often becomes the cheaper option, and it's worth revisiting your financing then rather than assuming the physician loan is permanent.

What Lenders Still Require

None of that means the underwriting is loose. Lenders still require solid credit, typically 700 or higher, though requirements vary by program. Reserves are often required too, sometimes several months of mortgage payments held in savings, since a new physician's income hasn't started flowing yet at the time of closing. And these programs are usually restricted to specific degrees: MD, DO, and often DDS, DMD, or DVM, depending on the lender. A physician assistant or nurse practitioner typically won't qualify for the physician-specific version, even though the income and student loan profile might look similar.

Documentation tends to be lighter than a conventional file, but it's not nothing. Here's what we typically need to get started:

• A signed employment contract or offer letter with a defined start date

• Proof of medical licensure or confirmation that licensure is in process

• A recent credit report and score

• Bank statements showing your reserves

• Current student loan statements showing your loan type and payment status

That list moves fast because it has to. Physicians relocating for residency or a new position often have a tight window between accepting an offer and needing a place to live, and this program is built around that reality rather than fighting it.

The Trade-offs Worth Naming

Because this is a specialty, non-conforming product, it isn't offered by every lender, and terms vary more from one lender to the next than they do with a standard conventional loan. Buying with little or no money down also means starting with very little equity, so a market dip or an early move could leave you underwater faster than a borrower who put 10 or 20% down. And a 0% down payment doesn't erase a large student loan balance sitting alongside a new mortgage payment; it just means the two debts are carried side by side instead of one delaying the other.

Who This Is Actually Built For

This loan is built for a specific window in a medical career. Residents and fellows early in training, with a signed contract and a start date on the horizon, are the clearest fit. So are newly attending physicians in their first year or two of practice, whose income has jumped but whose tax returns don't reflect it yet. It's less useful for an established physician years into practice with a strong tax return history, who may qualify just as easily, and more cheaply, through a conventional loan.

If you're staring down a residency contract and a student loan balance and assuming homeownership has to wait, run the actual numbers before you decide that. We can look at your specific contract, your loan balance, and your timeline, and tell you plainly whether this path makes sense for you or whether waiting genuinely is the better move.