The Real Math on a Physician Mortgage Versus a Conventional Loan

By Ryan Inman
Published Oct 5, 2026 · Updated Nov 12, 2026

A new attending buys a $650,000 house. Salary $350,000. Student loans $300,000, currently deferred. She has $40,000 in savings and wants to know which loan actually costs less.

Here is the answer, worked out line by line. The monthly payments are computed from published benchmark inputs and labeled illustrative, because your actual quote depends on your credit, lender, and the week you lock.

Path A: physician loan

100 percent financing is available up to $1 million at most physician programs, so 0 percent down works here. The loan is $650,000. The rate is the 7.28 percent benchmark plus a 0.30 percent premium, the midpoint of the published range: 7.58 percent. No PMI, ever.

Principal and interest: $4,581 per month (illustrative).

Cash to close on the down payment: $0.

Path B: conventional loan, 5 percent down

Five percent down is $32,500, inside her savings. The loan is $617,500 at the 7.28 percent benchmark. PMI applies because the loan is above 80 percent of the home's value.

Principal and interest: $4,225 per month (illustrative). PMI on a $617,500 loan runs roughly $200 to $466 per month. Total: $4,425 to $4,691 per month (illustrative).

Cash to close on the down payment: $32,500, nearly all her savings.

Path C: conventional loan, 20 percent down

Twenty percent down is $130,000. She does not have it. But this is the path the rate premium is measured against, so run it anyway.

Principal and interest on the $520,000 loan at 7.28 percent: $3,558 per month (illustrative). No PMI.

Cash to close on the down payment: $130,000.

The DTI difference, with the $300,000 student loan

This is where the comparison usually gets decided before the rate question is even asked.

Her gross monthly income is $29,167. Under conventional rules, her deferred $300,000 student loan balance counts at 1 percent: $3,000 per month in her debt to income ratio, even though she pays $0. At the 45 percent ceiling, her maximum total monthly debt is $13,125. The student loan fiction eats $3,000 of it, leaving $10,125 for the housing payment plus any other debts. The conventional 5 percent down payment of $4,225 plus PMI fits, but barely, and any car payment or credit card minimum comes straight out of the same budget.

The physician loan treats the same student loan differently. Many programs exclude student loans deferred at least 12 months after closing. Where loans are not excluded, programs typically use the actual income driven payment, even $0, instead of the 1 percent rule. At a $0 counted student loan payment, her $4,581 physician loan payment is 15.7 percent of gross income. She qualifies easily.

This is the single biggest qualification difference between the two paths, and it has nothing to do with the interest rate.

The PMI cost on Path B

Run the PMI over time, not just per month. On a comparable conventional loan, the balance is scheduled to reach 80 percent of the original value after about 130 payments, just under 11 years. Paid until cancellation, PMI totals roughly $26,000 to $61,000. That is money that builds zero equity and protects the lender, not you.

The rate trade off on Path A

The physician loan's premium is the price of the no PMI, zero down structure. On a $650,000 loan, each 0.125 percent of rate costs about $55 a month. The full published premium range works out to:

0.125 percent premium: about $55 more per month, roughly $19,900 in extra interest over 30 years
0.30 percent premium: about $133 more per month, roughly $47,900 in extra interest over 30 years
0.50 percent premium: about $223 more per month, roughly $80,200 in extra interest over 30 years

(All illustrative, computed from the benchmark rate and the published premium range.)

The verdict for this physician

Path C wins on monthly cost but requires $130,000 she does not have. That is the entire point of the physician loan: it is not competing against a 20 percent down conventional loan you can afford. It is competing against the loans you can actually get.

Between the two live options, Path A costs about the same per month as Path B, keeps $32,500 in her pocket, avoids $26,000 to $61,000 of PMI over the first decade, and clears DTI by a wide margin instead of scraping the ceiling. The price is a higher rate on a larger loan balance, which is real money over 30 years.

The honest framing: the physician loan is the cheaper way to buy a house with no down payment. It is not the cheapest way to buy a house, period. That title belongs to the 20 percent down conventional loan, which requires the one thing a new attending usually lacks: $130,000 in cash. Match the loan to your actual balance sheet, not the one you wish you had.

Last reviewed: 2026-10-04. Limits and program terms change. The reviewed date moves when they do.