Physician Loan vs Conventional Loan for a Dentist Buying a Condo

The Quick Read: A physician loan suits a dentist with heavy student debt, a new contract and little cash saved. It is usually a lender’s own product, and each lender sets its own terms. Neither is better in the abstract. The condo and your finances decide it.

Here is the honest answer. A physician loan is built around your career, not your balance sheet. Many lenders that offer one include dentists with physicians, though the degree list varies by lender. A conventional loan is built around the file: credit, leverage, debt ratios and the property. Sometimes the career-based product wins. Often a conventional loan is simpler than dentists expect.

One more point before the comparison. A condo adds a second test. The building has to be acceptable, not just you. That test can sink a conventional loan, and it matters for a physician loan too.

Side-by-Side

The conventional column below reflects the wholesale programs Lendmire works with. The physician column is general, because no agency or regulator defines the product. Treat every physician-loan cell as “varies by lender.”

Two things stand out. The conventional side is published and comparable from lender to lender. The physician side is a negotiation with one lender at a time.

What Each Option Actually Is

Lenders that offer a physician loan typically keep the loan on their own books, which is why the terms differ so much between them. The marketing usually stresses three things: little or no down payment, no mortgage insurance, and lenient treatment of student debt and new-job income.

A conventional loan is the standard mortgage that follows agency guidelines. Across the wholesale programs I arrange files through, the envelope for a primary residence is 97% LTV (a 3% down payment) when at least one borrower is a first-time buyer, and 95% LTV (5% down) otherwise. LTV, or loan-to-value, is the loan amount divided by the home’s value. The wholesale credit floor starts at a 620 decision score. The automated underwriting finding governs most files, with a total debt ratio ceiling of 50%.

The 97% option has conditions. Fannie Mae’s 97% LTV FAQ describes it as a fixed-rate loan on a one-unit principal residence, run through the agency’s automated system. Eligible condos are included. Dentists often assume conventional means 20% down. It does not. Those figures are subject to lender guidelines and full file review.

The Condo Problem Comes First

Before either loan matters, the building has to pass. This is the part most comparison pages skip, and it is where condo deals get derailed.

For a conventional loan that will be sold to an agency, Fannie Mae’s project standards require the lender to confirm the project is eligible. An “established” project generally has at least 90% of units conveyed, is fully complete, has no further phasing, and is run by an owner-controlled HOA. New or newly converted projects go through a fuller review.

Fannie Mae publishes problem areas that make a project ineligible: critical repairs, inadequate insurance, significant pending litigation, and hotel-style or short-term-rental operation. Fannie Mae also offers a public Condo Status Finder. You need the project’s legal name, address, unit count, tax ID and style to search. Check it before you fall in love with a unit.

Two edge cases are worth knowing. A detached condo unit, one that shares no walls, floors or ceilings with another unit, can have project review waived. And a condo hotel or a building that runs daily rentals is ineligible.

A physician loan is not tied to those project rules. Some portfolio lenders are more flexible, and some are stricter. Ask early, and ask in writing.

HOA dues also count. They are part of your monthly housing expense, so they weigh on your debt ratio under either loan.

How Income and Student Debt Are Treated

This is where dentists feel the difference most.

Conventional. Lenders look for a reliable two-year employment pattern, but a shorter history can work when other strengths offset it. A signed offer or contract can support income for a borrower who has not started yet, with conditions. The job generally has to start within a limited window after closing. The offer cannot come from a family member or an interested party, per Fannie Mae’s announcement on employment offers. That matters if you are joining a relative’s practice. A verbal verification of employment is also required for offer-based income.

Student loans on a conventional file. They count. If the credit report shows a payment, the lender may use it. If you are on an income-driven plan and can document that your required payment is zero, the lender may count the loan at that documented amount. For deferred loans, the lender may use a percentage of the balance. The details sit in Fannie Mae’s monthly debt obligations rule.

Physician loans. Lenders often describe flexible student-loan treatment and acceptance of a contract alone. That is lender-specific. Ask exactly how your loans would be counted, and get the answer before you apply, not after.

Mortgage Insurance: Where the Real Trade-Off Lives

On a conventional loan above 80% LTV, mortgage insurance is required. The charter rules for the agencies call for credit enhancement above that line, and mortgage insurance is the usual form, as FHFA explains. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.

The piece dentists often miss is that borrower-paid mortgage insurance does not last forever. You may request cancellation when you reach 80% of the original value, if you have a good payment history, no subordinate liens and no decline in value. The servicer must end it automatically at 78%. Published typical annual premiums on conventional loans run roughly 0.58% to 1.86% of the balance. That is a range, not a quote, and your file sets the real figure.

Physician loans often advertise no mortgage insurance at high leverage. That is a real feature. The cost shows up elsewhere: a larger balance, less equity cushion if values soften, and, depending on the lender, different pricing. I will not compare prices here because they change by file and lender. Ask each lender for a Loan Estimate and compare the full terms side by side.

When a Physician Loan Is the Better Fit

A physician loan tends to win in a few situations.

• A new graduate or early-career dentist with a signed contract, little cash saved and student debt that makes the conventional ratios tight.
• Someone who wants to keep cash for equipment, a practice buy-in or a practice loan, and would rather avoid mortgage insurance.
• A condo that a conventional loan will not accept, where a portfolio lender’s own condo rules happen to fit the building.
• A loan amount above the conforming limit. Loans above the county’s limit are jumbo and fall outside agency delivery. Some physician programs allow larger balances. Check the FHFA conforming loan limit page for your county.

Think it through before choosing this route. A higher share financed means more interest over the life of the loan and less cushion if values drop. Run the long view, not just the day-one payment. Many borrowers plan to refinance later, which is a fair plan. It depends on future value and credit, so it is not a promise.

When a Conventional Loan Is the Better Fit

Conventional often wins more than the marketing suggests.

• A dentist with decent credit and some savings, who can put down 3% to 5% and accept mortgage insurance that later cancels.
• A first-time buyer. With a first-time buyer on the loan, the 97% option can leave you with a very small down payment on an eligible fixed-rate primary residence.
• A condo that is already on the approved path. If the project shows as eligible, a conventional loan is straightforward, and it is comparable across lenders.
• Someone who wants transparency. Agency rules are published. You can read them. Physician programs are often harder to verify.
• A buyer who plans to keep the home a long time. Mortgage insurance that drops off at 78% can matter more over years than a short-term break at closing.

Credit events matter under agency rules. The waiting periods are four years from a chapter 7 discharge, seven from a foreclosure, and four from a short sale or deed-in-lieu, shorter with documented extenuating circumstances.

If the home is a second home, not your residence, occupancy changes the leverage. Second homes go to 90% LTV on the programs I work with, and conventional rules treat them differently from a primary home. That is a different loan from the one a physician program usually targets.

Three Dentist Profiles

These are scenarios in words, not dollars.

The new graduate with a signed contract. Student debt is high, savings are thin, and the job starts soon. A physician loan may fit better. A conventional loan can still work if the offer meets the agency’s conditions and the debt ratio stays within limits. Compare both before choosing.

The associate with a couple of years behind them. Employment history is established, credit is solid and some savings exist. A conventional loan at 95% LTV, with mortgage insurance that cancels later, is often the cleaner long-term answer.

The practice owner. Underwriting here depends on how the lender reads business income, and it varies. Bring two years of traditional personal-income documentation and talk to a broker before assuming either path.

Common Mistakes

• Choosing a loan before checking the condo project’s status.
• Assuming “no mortgage insurance” means “cheaper,” without comparing the full Loan Estimate.
• Counting on a physician loan’s student-debt treatment without getting the method in writing.
• Taking an offer letter from a family practice and assuming it will count.
• Forgetting HOA dues and special assessments in the monthly budget.

A Balanced Verdict

Neither product is a trick. A physician loan is a lender’s custom product that trades some long-term cost and transparency for flexibility now. A conventional loan is the standard, published product that often beats the marketing once you see how low the down payment can go and how mortgage insurance falls away.

If you are early in your career with heavy debt and need every dollar of cash, ask about physician loans. If your file is solid and the condo passes review, a conventional loan deserves a serious look, and it can leave you more options later. The condo may settle the question for you, so check it first.

Lendmire’s conventional loan programs are one way to see what the standard route asks of your file.

If you are buying a home and want to see whether a conventional loan fits your file, Lendmire can help you compare the options and what each one asks of the file.

For your own numbers, request a scenario review with Lendmire.

About Lendmire

Lendmire — NMLS# 2371349 — is a mortgage broker that arranges FHA, VA, conventional and jumbo home purchase and refinance financing in 16 states through wholesale lenders. Every option is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. Fannie Mae 97% LTV Options FAQ

2. Fannie Mae Selling Guide B4-2.1-01, General Information on Project Standards

3. Fannie Mae Condo Status Finder

4. Fannie Mae Selling Guide Announcement SEL-2023-10

5. Fannie Mae Selling Guide B3-6-05, Monthly Debt Obligations

6. FHFA, Private Mortgage Insurer Eligibility Requirements

7. FHFA conforming loan limit page