Physician Loans in Austin: How Doctors Buy With Little Down

Medical residencies in Austin routinely pay $60,000 to $75,000 a year. The median home price in Travis County in 2026 sits around $550,000. On paper, a new resident shouldn’t be able to buy a home in Austin right now. In practice, many do, and the product that makes it possible is the physician loan.

Physician loans are portfolio mortgage products offered by specific lenders to MDs, DOs, dentists, and other eligible medical professionals. They work around the two things that make conventional loan qualification difficult for doctors: massive student loan debt and income that doesn’t fit the standard W-2 timeline.

Key points:

• 0-10% down payment options, with no PMI required
• Student loan debt counted differently, or excluded from DTI entirely
• Employment contracts accepted in place of pay stubs
• Loan amounts from $500,000 to $2 million at most lenders
• Subject to credit, income, and property qualification

Why Conventional Loans Don’t Work for Most New Physicians

A conventional mortgage uses your debt-to-income ratio (DTI) to determine how much you can borrow. DTI divides your total monthly debt payments by your gross monthly income. The maximum DTI for a conventional loan is typically 45 to 50 percent. For a medical resident carrying $300,000 in student loan debt, the standard calculation counts 1 percent of the outstanding balance per month, which works out to $3,000. On a $6,000 monthly resident salary, that figure alone exceeds any conventional threshold before the mortgage payment even enters the picture.

Physician loans address this directly. Most programs exclude deferred student loans from the DTI calculation, or use the actual income-based repayment (IBR) payment amount rather than the balance-based formula. That one change often makes the difference between qualifying and not qualifying.

The PMI (private mortgage insurance) barrier also disappears. Conventional loans require PMI whenever the down payment is below 20 percent. On a $550,000 purchase, that means $110,000 down before PMI goes away. Most physician loan programs allow 0 to 10 percent down with no PMI at all.

Who Qualifies for a Physician Loan in Austin?

Eligibility rules vary by lender, but most physician loan programs accept:

• MDs and DOs, including current residents and fellows
• Dentists (DDS and DMD) and oral surgeons
• Physicians within 5 to 10 years of completing residency
• In some programs: optometrists, podiatrists, veterinarians, and pharmacists

Residents and fellows often qualify before their first paycheck arrives, as long as they have a signed employment contract with a start date within 60 to 90 days. This matters in Austin, where Dell Medical School residents and physicians joining local health systems frequently want to buy during the transition between training and their first attending position.

Credit requirements typically start at 680 to 700, though lenders offering the most favorable terms want to see 720 or higher. Physician loans are a debt-structure workaround for doctors with strong earning trajectories and unconventional financial profiles. They are not a low-credit-score shortcut.

Loan Limits: How Much Can You Borrow?

Physician loans are portfolio products, meaning the lender holds them on its own books rather than selling them to Fannie Mae or Freddie Mac. This gives lenders flexibility to set their own limits. Most programs allow loan amounts between $750,000 and $1.5 million with 5 to 10 percent down, and some go to $2 million with a larger down payment.

In Austin’s market, where homes in neighborhoods like Circle C Ranch, West Lake Hills, or Mueller run $700,000 to $1.2 million, the higher limits matter. For purchases above the 2026 conforming limit of $806,500, you would normally be looking at a jumbo loan with stricter reserve and down payment requirements. A physician loan covering that same price range often has more forgiving qualification criteria for the right borrower profile.

The Down Payment Tiers

Here is how down payment options typically break down across physician loan programs:

• 0% down: Available at some lenders for residents and fellows, usually capped at $750,000 to $1 million
• 5% down: Available at most programs up to $1 million, sometimes up to $1.25 million
• 10% down: Generally required for loan amounts above $1.25 million

Saving 0 to 10 percent down is far more realistic for a medical resident than saving the 20 percent that would eliminate PMI on a conventional loan. On a $600,000 purchase, 20 percent is $120,000. Ten percent is $60,000. The PMI savings is a secondary benefit; the down payment reduction is the primary one.

Assets still matter, even when the down payment is small. Lenders want to see cash reserves after closing, typically 3 to 6 months of the proposed mortgage payment in verifiable accounts. This is separate from the down payment itself. If your savings are thin relative to the loan size, understanding how reserves factor into mortgage approval is a useful read before you apply.

What Lenders Actually Look At

Physician loans are not automatic approvals. Underwriters examine:

• Employment contract or offer letter. A start date within 90 days is the standard. Part-time arrangements or locum tenens contracts can complicate underwriting.
• Credit history. A clean payment record on credit cards, car loans, or previous debts is expected. Collections, recent late payments, or thin credit files require explanation.
• Specialty and employment type. Many lenders prefer W-2 physicians over 1099 independent contractors. Self-employed physicians running their own practices may need additional documentation.
• Property type. Most physician loans cover primary residences only. Condos require warrantable project status.

One thing that surprises borrowers: the interest rate on a physician loan is often slightly above the rate on a comparable conventional or jumbo loan. You pay for flexibility in how your debt and income are evaluated. On a $700,000 loan, a 0.25 percent rate premium costs roughly $145 a month. For most physicians, the ability to buy with 5 percent down rather than 20 percent, freeing up more than $100,000 in capital, makes that trade-off worthwhile.

If you want to compare the physician loan rate against a standard jumbo and see which pencils out better for your situation, the break-even framework used in refinance math applies here too: divide the cost difference by the monthly savings and see how long it takes to recoup.

Frequently Asked Questions

Can I use a physician loan as a medical resident in Austin?

Yes. Most physician loan programs accept residents and fellows with a signed employment contract showing a start date within 60 to 90 days, even before the first paycheck arrives. You will need a credit score of at least 680 to 700 and sufficient cash reserves, but the student loan structure that normally blocks residents from conventional loans is handled differently under a physician loan program.

Do physician loans require mortgage insurance (PMI)?

No. PMI is waived on physician loans even when the down payment is below 20 percent. This is one of the primary reasons physicians use these programs instead of conventional loans. Avoiding PMI on a $600,000 purchase typically saves $150 to $250 per month.

How are student loans counted in a physician loan application?

Most physician loan lenders exclude deferred student loans from the DTI calculation entirely, or use the actual income-based repayment (IBR) payment amount rather than 1 percent of the outstanding balance. That difference is significant for physicians carrying $200,000 to $400,000 in student debt, where the 1 percent rule alone would make conventional qualification nearly impossible.

What credit score do I need for a physician loan?

Most physician loan programs require a minimum of 680, with 720 or higher giving access to the best terms and highest loan amounts. These programs address debt structure differently but still require a solid payment history. Collections, recent late payments, or thin credit profiles will need to be explained and resolved before approval.

Can I buy a $900,000 home in Austin with a physician loan?

Yes, if you meet the income and credit criteria. Most physician loan programs allow loan amounts up to $1.25 to $1.5 million with 5 to 10 percent down. A $900,000 purchase would require $45,000 to $90,000 as a down payment depending on the program, plus 3 to 6 months of reserves. That is more accessible than the $180,000 down payment a conventional lender would require to avoid PMI at that price point.

Are physician loans available for self-employed doctors?

Some programs include self-employed physicians, but eligibility varies by lender. Doctors running their own practices or working as 1099 contractors typically need two years of self-employment history plus business and personal tax returns. A few specialty lenders offer bank statement or 12-month profit-and-loss options for physicians without a full two-year history. Ask about this before assuming you do not qualify.

If you are a physician, resident, or fellow looking at Austin real estate, a physician loan is worth evaluating before assuming you need to wait until your income grows or you have 20 percent saved. The structure of these programs was built specifically for the financial profile that medicine creates. Schedule a discovery call and we will look at your numbers together, no pressure, no commitment, just clarity on what you qualify for today.

Ferrando Financial LLC | NMLS# 2403080 | Licensed in Texas. This content is for educational purposes only and does not constitute a commitment to lend. Loan approval is subject to credit, income, and property qualification. Physician loan availability, eligibility criteria, and loan limits vary by lender and are subject to change.