How much can doctors afford to spend on a house?

Published Date: September 25, 2023

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When it comes to buying a house — whether it’s a primary residence or a vacation property — doctors are in a unique situation. Many doctors are considered high earners, but it can take years for the hard work to pay off. What’s more, many younger doctors are saddled with a large amount of student loan debt, which can make qualifying for a mortgage trickier than it might be for other buyers. Whether you’re just considering buying or are thinking of adding a second home to your real estate portfolio, here are a few things doctors should consider, from how much you can afford to how to approach the process.  

What salary do I need to afford a million-dollar home?

Conventional wisdom says that you need an annual salary somewhere around $200,000 to afford a million-dollar house, but it all comes down to your individual financial situation. If you’ve managed to save a large down payment — 20 percent or more — your monthly mortgage costs will be lower than if you have a meager down payment. Interest rates also play a big role in home affordability. What was affordable with the historically low interest rates of 2020-21 may be more of a stretch with rates that are significantly higher. You’ll also want to consider monthly costs above and beyond your mortgage payment. This includes things like HOA dues, utilities, maintenance, insurance and property taxes. 

When is the right time for a doctor to buy a home?

Buying a house is a big financial commitment, and it can take a significant amount of time to gain enough equity to offset the upfront purchase expenses like closing costs, repairs and moving expenses. It’s common for doctors who are just starting out to move frequently, in pursuit of a specialty program, new opportunity or fellowship. In this busy career phase, renting may make more sense until you land a long-term position. 

Buying a first house during residency

Deciding to buy your first home is a milestone for all kinds of buyers, but physicians have a couple of additional financial realities to address during the application process. If you’re a newer doctor, your loan debt may be high and you likely haven’t secured the salary of more established colleagues. This hurdle is specifically high for those buying a house during their residency. A core part of getting approved for a mortgage loan is meeting the debt-to-income ratio requirements, or DTI. This is a calculation that compares your monthly debt obligations to your gross income. It’s a way lenders can be reassured that you’ll be able to repay your loan without defaulting. Most medical school graduates have significant student debt. According to the Association of American Medical Colleges, anywhere from 76% to 89% of graduates have student debt, with an average of over $200,000 owed. And that can make it hard to stay under the debt-to-income ratio limits. Enter the physician mortgage loan. Also called doctor loans or medical professional loans, these mortgages are specifically designed for doctors whose highest earning years are yet to come. These loans may have low (or no) down payment requirements, no requirement for private mortgage insurance (PMI) or more generous qualification criteria. Ask your mortgage lender for more information about this loan option. 

Purchasing a second home as a doctor 

As your career progresses, you may want to consider buying a second home. Being a physician is time-consuming and stressful, so it’s nice to have a place of your own to relax and unwind. Imagine cozy weekends in a mountain cabin, summer vacations in a sunny lakefront retreat or watching an ocean sunset from your private patio. Pacaso is a great solution for busy professionals in a wide range of occupations to buy a second home. Ownership is shared among up to eight co-owners, which means that your upfront investment is lower. And we have homes in California Wine Country, the mountains of Colorado, sunny Mexico, fun-filled Florida, to name just a few crave-worthy destinations.Co-owning a second home with Pacaso is a smart option for busy doctors, as it gives you the benefits of second home ownership without the work. Your dedicated property manager takes care of maintenance, repairs, cleaning and making utility, insurance and tax payments. That means that every time you’re ready to relax, you can just show up, unpack and unwind. Our equitable scheduling ensures that every owner has plenty of time to enjoy the home throughout the year. The Pacaso app allows you to access real-time booking, scheduling stays from two days to two years in advance. Ready to see how buying a second home would pencil out for you? Try our calculator.

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Jen Lyons

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