Housing for residency!

Hello everybody! I have a question for those of you who have survived the medical school to residency transition. My husband is starting his internship/residency next year in a new city. We have been renting all this time and have exhausted ALL of our savings to put him through school. We are trying to figure out if there is any way we can buy a house in our residency city. We probably could come up with some money for closing costs, but we have no money down, etc. Plus, I am not working right now, but will go back to work in the fall as a teacher. I am hoping to sign a contract shortly after the match. I know it sounds crazy, but has anyone ever bought a house and got a mortgage in this situation? Are there mortgage companies that will work with you in this situation? We actually have no other debt other than student loans right now. We have three growing children and would love to finally buy and not rent. I'd love your help. Heather

Hi Heather,

I think whether or not you're able to buy a home during residency depends largely on where you live. We lived in a beach community in Southern California during residency where the average house price was $600k+ for a 3 bed/2 bath fixer....so we certainly couldn't afford to buy in that market. If you live in a more affordable area, I think you can afford to buy during residency.

There are a lot of lenders that are willing to waive down payments and closing costs for doctors. We bought a house as soon as DH was done with residency and our lender, Wachovia, waived almost all closing costs (except for the home inspection & the attorney's closing fees which we had to pay cash for). I think BofA also waives closing costs & down payments. Wells Fargo is another. If your med school loans are in forbearance, most lenders won't take them into consideration when evaluating your assets and debts.

There are a lot of calculators on the internet that can help you figure out how much you can borrow. I think http://www.bankrate.com is one of them.

Even though DH didn't start his post residency job till July 1, we closed on our house at the end of April. Our lender approved us on his new income even though he hadn't actually started his job yet. If you sign a contract to teach in the Spring, they should be able to consider that income even though you won't actually be starting till the Fall.

I hope I was able to answer some of your questions. Good luck with your transition to residency life!

[migirl]

Hi Heather,

Congratulations on your DH finishing med school and transitioning to residency life! I agree with others in that your ability to own your own home will depend heavily on where you will live. My DH and I bought our home at the end of med school/beginning of residency even though we had DH's med school loans, I had no job (and no prospects even), and the only income we had on our mortgage application was DH's potential income from a job that he wasn't even going to be starting for a few months. So, yes, I would say that most lenders would be willing to work with you! My advice would be to contact some of the current residents and find out who their lenders are, or go through the resident education office and find out if any banks/lenders are affiliated with the program. That's how we found our lender and they were very willing to work with us since they were familiar with medical residents' circumstances and their financial situations. Good luck!!

We bought a house with the beginning of residency as a one income family- the resident income and a healthy six figure med school loan balance. Most banks have programs for the 'newly minted' doctor in training. It is all in the asking. We have used Bank of America for both our home loans and haven't used any $$ for down payment. They will also help with the closing costs, or you can negotiate that with the seller too. Our first home, we actually came away at close getting a check for nearly $2K. We were very proud of our negotiating!

It just takes some researching and then asking and making the choice that you and your spouse feel is right for you! Good luck!

[DCJenn]

We rented for the first year (although there were some extenuating circumstances- we actually started renting before he graduated because I had started my new job before he finished. It was a complicated time, as I recall)

Anyway, we weren't sure we wanted to buy because we knew that the Army wouldn't keep us in San Antonio after residency anyway. But, I got tired of paying someone else's mortgage and we ended up buying. Since we only owned the place for two years, we only broke even on the sale, after all the fees were paid. But it having a mortgage history together certainly helped when we bought this place this summer (again, we rented for a year after he started the fellowship, again due to complicated schedules) We have one of the most "creative" financing packages that I know of- we used Wells Fargo.

Jenn

what we did

Hi Heather-

My husband and I bought a condo during MS2, and it really worked out just fine! I had a job that didn't make much and obviously, he was kicking in some from his loans, but our mortgage payment ended up being about $20 less/month than the townhouse we were renting. We did come up with about 3K for the down payment from family, but when we put in our bid for it, our realtor put in the amount we would buy it for, but also requested that the sellers pay our closing costs. They agreed to it! Alternately, there are programs like Ameridream, which "gift" a downpayment to you. Basically, you apply for it and just need to have the seller agree to accepting a separate payment from their organization for the gifted money. I think the website is http://www.ameridream.com

Originally, we couldn't get a mortgage loan approved because they wouldn't accept the med school loan living stipend as "income" but our realtor researched and found a loan that could be approved solely off our credit score. This probably wouldn't be an issue for you in residency, but it taught us that those realtors really do know their stuff and they don't get paid unless you buy a house, so they'll work hard for it if you have the right person--so try and find a realtor that is sympathetic to your situation who will really work their butt off and make it work for you! Let me know if you have any questions--