Citizens Bank Physician Mortgage Loans

Doctor Loans—Understanding Loan to Value Effect on Rates

Citizens Bank Physician Mortgage Loans
Citizens Bank Physician Mortgage Loans
Citizens Bank Physician Mortgage Loans

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Doctor Loan Mortgage Rates: Understanding “Loan to Value”

Many physicians looking for their first (or second, or third…) mortgage ponder the option of a LOW or ZERO down payment loan. While shopping with potential lenders, you may notice a variety of “Loan-to-Value (LTV)” options. There are several factors in choosing a physician mortgage: term length, amount borrowed, and your credit score are some of the first which come to mind. But when it comes down to deciding how much you plan on putting down on your home, understanding LTV helps you to make the right choice for you.

What is Loan-to-Value…and How Can it Affect my Mortgage?

In a nutshell, the LTV is a comparison of the amount you (intend to) borrow and the value of your home. Divide the loan amount by the value of the home; multiple by 100, and you have the percentage. The equation looks like this:

LTV = (Amount borrowed ÷ Appraised value of property) × 100

The most common LTV is 20%. When lenders advertise “20% down” they are stating that they will loan 80% of the amount needed to purchase the home, while the borrower needs to provide 20%. You can, of course, pay more than 20% of the home’s appraised value in a transaction, and there are benefits to this. Typically, the lower your LTV, the lower the interest rate you will receive. A higher LTV correlates to a higher interest rate because there is a higher risk to the lender should you default on the loan. Therefore, it is beneficial to put as much down as possible for most traditional mortgages.

Physician Mortgages and LTV Rates

One of the most notable advantages to physician mortgage programs is a more lenient LTV ratio. Thanks to the stellar reputations of medical professionals, lenders offer exclusive terms and rates, and a higher LTV is one of those benefits. After finishing medical school and residency, many young doctors simply do not have the savings to put down on a house. What they do have is income potential. Therefore, although you may not look good on paper, your future is bright. Even without a significant down payment, it probably makes good sense to move from renting to owning a home. Warning: There is a fine line with high LTV—too high and you could be required to pay for private mortgage insurance (PMI). Many (but not all) physician mortgage lenders remove this requirement, so make sure to ask potential lenders what their policy is on LTV and PMI.

The Lenders

Many mortgage companies have strict criteria for potential borrowers. If you have a small down payment, you may not qualify for their lowest rates. However, lenders who specialize in physician mortgages understand the unique financial needs of doctors. They offer physician lending perks which include higher LTV including zero down payment—financing options. In this series, we introduce physicians to these lenders, helping you to sort through them based on their individual programs and mortgage criteria. Beginning as High Street Bank in Providence, Rhode Island in 1828, the financial institution expanded within Rhode Island before becoming Citizens Savings Bank in 1954. Experiencing a multitude of acquisitions throughout its history, Citizens became a subsidiary of the RBS Group. It expanded its presence throughout New England, the mid-Atlantic and Midwest, becoming a regional powerhouse and a leading financial institution in the United States. After weathering the global financial crisis of 2008, Citizens transformed its approach to banking and began opening branches in retail locations, including supermarket chains across the country.

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What Makes Citizens Financial Group Doctor Loan Mortgage Program attractive:

Minimum Credit Score

700

Loan Amounts For Residents & Fellows

95% financing up to $850,000
89% financing up to $1,000,000
85% financing up to $1,500,000

Loan Amounts For Practicing Physicians

95% financing up to $850,000
89% financing up to $1,000,000
85% financing up to $1,500,000

Highlights

Student loans deferred 12 months from debt to income ratio
Construction-to-permanent financing eligibility up to 85% financing
Primary residence only
43% debt to income < loan to value < 90%
40% debt to income 90%
Fixed adjustable rates available
Limited cash out refinances
No PMI, mortgage insurance

Citizens Financial Group may be the right lender for your needs. Convenient locations in retail supermarkets—some even open on Saturdays—makes banking easier than ever. In its commitment to community service, Citizens partners with Junior Achievement to support financial education for youth and has established its own education program, Manage Your Money. Citizens has recently announced a renewed commitment to social equity, rolling out and expanding a host of programs designed to strengthen communities and address economic needs. Visit the Citizens Financial Group website to determine if this lender offers services in your community. You can also check out our series on physicians mortgage providers here.

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