Is it better to finance a home with a physician loan or a conventional loan?
That is the main question people ask when deciding when to buy a home.
Would you be surprised If I told you they were actually the same thing?
This is something I clarify to physicians almost every day when talking about physician loans.
Unfortunately, there has been some misinformation out there regarding physician loans that they are not conventional mortgages.
This is not true.
There are only 2 Types of mortgages out there.
1. Private Funded Loans (Conventional)
2. Government Funded/Backed Loans
a. FHA (Federal Housing Admin)
b. VA (Veterans Admin)
c. USDA (United State Department of Agriculture).
By definition, if the loan is not one of the three government backed loans- it is a conventional loan.
What these well-meaning people REALLY mean when they say physician loans are not Conventional loans is that they are not CONFORMING conventional loans. Which simply means they don’t follow 100% of the Fannie Mae and Freddie Mac guidelines to be bought in the secondary real estate market.
Just because a loan is Non-Conforming does not automatically mean it has worse rates or terms. By definition, most physician loans are non-conforming, but they beat out most conforming conventional mortgages every day because of this with better rates and overall loan terms.
Some conforming conventional loans are better than non-conforming. And vice versa. It is important to shop around to understand this.
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