In this review, we'll cover everything you need to know about the Alerus Financial physician loan program.
8 min read
Last updated February 21, 2024
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Expert Take
The Alerus Physician loan is available in more than half of the United States and offers options for many medical professionals.
Alerus Financial offers a robust physician loan program to help medical professionals secure financing early in their careers.
Alerus focuses heavily on the relationships they’ve created in their communities and helps professionals at all levels reach their financial goals.
In this review, I’ll help you understand what Alerus Financial offers doctors and what it entails to see if it suits your financial needs.
About Alerus Financial
Alerus Financial was founded in 1879 as the Bank of Grand Forks in the Dakotas. Throughout its years, it quickly grew, acquiring other banks and eventually purchasing a retirement services company.
It changed its name to Alerus Financial to reflect its many services beyond traditional banking.
- BBB score: A+
- JD Power Score: N/A
- Phone Number: 800-279-3200
- Services Offered: Consumer and business banking, including wealth management, borrowing, and employee benefits
- Financing Options: 100% on loans up to $750,000, 95% on loans up to $1 million, 90% on loans up to $1.5 million
- Physician Loan Products: Fixed-rate and adjustable-rate mortgages
- Maximum Loan Amount: $1.5 million
- Qualifying Degrees: MD, DO, DDS, OD, DMD, and DVM
- Private Mortgage Insurance: Not required
Every bank has different qualifying requirements for a physician loan . Here’s what to expect from Alerus Financial.
- Down Payment: 0% – 10% down, depending on how much you borrow
- Eligible Degree: Must have a medical doctor or dental degree (can be in residency)
- Closing Cost Guarantee: Offers a $20,000 closing guarantee to sellers; if the loan doesn’t close based on the pre-approval, Alerus will pay the seller $20,000
How to Apply
It’s easy to apply for an Alerus Financial physician mortgage. Before you get started, consider these steps to make the process as seamless as possible.
1. Connect With an Alerus Financial Loan Officer
Before looking at houses, consider getting pre-qualified for a physician loan. Talking with an Alerus Financial loan officer can help you determine if you can afford the loan and what terms they might offer.
This informal step allows you to see what Alerus offers based on your qualifying factors. You’ll share basic information with the loan officer, including your personal information, income, assets, and information about your degree and employment.
The loan officer will use the information provided to see if you meet the Alerus Financial requirements for a physician loan.
2. Gather and Prepare Your Documents
When you’re ready to take the leap and look at homes, you should prepare for a pre-approval. This is a more formal step requiring an underwriter to review your documentation to determine if you qualify for the loan.
Before taking this step, gather your necessary documents, such as pay stubs, W-2s, tax returns, bank and investment statements, and any information you have available from your employer.
The more documents you have available, the easier it is to get through the process.
3. Get Pre-Approved
After gathering your documentation, you can formally apply for a physician loan. You must talk to a loan officer to apply for the loan and complete a formal application, including allowing them to pull your credit.
An underwriter will evaluate your credit report and provided documentation to determine if you personally qualify for the loan. If so, they will write a pre-approval letter stating how much you can borrow and on what terms.
The pre-approval letter is usually good for 90 days and will include conditions you must clear, such as an appraisal and title search on the house.
4. Accept the Pre-Approval and Lock In Your Rate
If you accept the pre-approval terms, you can look at houses and make an offer if you find the right one.
When the offer is accepted and you have an executed sales contract, consider locking in your interest rate to ensure you have the rate you want at closing.
Rate locks last 45 days with most lenders, so be sure you lock within 45 days of your closing date. During this time, stay in contact with your loan officer to determine if there are any other conditions you must clear to close the loan.
Discover The Best Lenders
Answer just a few questions about your career, where you're buying, and how much you want to borrow. Our service will then show you the exact programs you're eligible for from vetted physician loan specialists who will guide you through every step of the process –obligation-free!
Discover The Best Lenders
Answer just a few questions about your career, where you're buying, and how much you want to borrow. Our service will then show you the exact programs you're eligible for from vetted physician loan specialists who will guide you through every step of the process –obligation-free!
Loan Type Property Type How will this property be used?
The Huntington Bank physician loan is for doctors and residents with an MD, DO, DDS, DVMM, or DMD degree. Huntington Bank offers options for 100% financing up to $1,000,000 and, like most lenders, doesn’t require PMI or charge a prepayment penalty.
The loans are available as fixed or variable rate, and they lend up to $2 million with a 10% down payment. The program is limited to primary residences and allows purchase and refinance loans.
BMO Bank
BMO Bank has a robust physician mortgage program for residents, fellows, and licensed doctors. The bank requires that you have a BMO checking account to qualify, and if you use the account for autopay on your mortgage, you can earn a 0.125% rate discount.
BMO uses flexible debt-to-income ratio guidelines to help doctors qualify. They also don’t have an income history requirement and accept future employment contracts if your start date is within 90 days. They lend up to 95% on loans up to $1.5 million and 90% on loans up to $2 million. Their loans are available on various property types and as fixed or adjustable-rate loans.
Flagstar Bank is one of the lenders with loans that are not specifically for doctors but for many professionals, including pilots, attorneys, accountants, doctors, and nurses.
They have strict FICO guidelines, requiring a 720 credit score to borrow up to $1 million with no money down or low down payment requirements on loans up to their maximum of $1.5 million.
The Flagstar Bank program is open to professionals in the first ten years of their careers and is available as an adjustable-rate loan. No PMI is required, and the qualifying guidelines are more relaxed than conventional loans.
The Citizens Bank physician loan program is open to MDs, DOs, DMDs, and DDSs who have been out of residency for ten years or less. They also open the program to self-employed doctors, but you need a 2-year history of self-employment to qualify.
If you haven’t started your position yet but have an active contract that starts within 60 days of closing, you can use that for qualifying factors, closing before you start your position.
However, Citizens Bank only loans up to $1 million and requires a down payment unless you borrow $850,000 or less. They exclude student loan debt that’s deferred for at least 12 months and allow a maximum 40% debt-to-income ratio.
KeyBank
The KeyBank Medical Professional loan is open to medical doctors and dentists with loan amounts as high as $3.5 million. They allow down payments as low as 5% and have fixed or variable-rate loans.
The KeyBank physician loan program is available for purchase and refinance, including cash-out refinance. KeyBank doesn’t charge PMI; the program is available on single-family homes, condos, and townhomes.
Pros and Cons
An Alerus Financial physician mortgage review wouldn’t be complete without helping you weigh the pros and cons of the program.
Pros
- Open to many types of physicians
- No PMI
- Lower than average minimum credit score requirement
- Fixed and adjustable-rate loans are available
Cons
- Low loan maximum
- Most loans require a down payment
Frequently Asked Questions
How much money can I borrow with an Alerus Physician mortgage loan?
Alerus lends up to $1.5 million in their doctor loan program. However, this doesn’t mean you qualify for a loan of that size. Your credit, income, assets, and current debts determine how much you can borrow.
What credit score does Alerus Financial require for its physician loan?
Most lenders require at least a 700 credit score for physician loans, but Alerus Financial allows scores as low as 680. This allows you more flexibility when borrowing a mortgage as a new doctor or resident.
What is the interest rate on Alerus Financial physician loans?
The Alerus Financial physician loan interest rates change daily as the market changes. In addition, each borrower pays a different interest rate as it’s based on your risk level, aka your ability to repay or the risk the lender takes in lending to you.
Is a physician mortgage loan a good idea?
It’s a good idea to proceed with caution when borrowing a physician loan. Just because they have relaxed underwriting guidelines and higher loan amounts doesn’t mean you should borrow the maximum amount allowed.
Look at the big picture and ensure you can afford the loan before choosing it. While borrowing $1.5 million to buy your dream home is exciting, it could be financially detrimental if you cannot afford it in the long term. Consider all the factors before choosing your loan to ensure it’s right for you and your family
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