Physician Loan or Conventional? The Pennsylvania Answer
Program and regulatory figures verified October 6, 2026. Details change; confirm your scenario with us.
Three differences do almost all the work, and one thing is identical in both columns. In Pennsylvania the identical thing is the one that costs the most.
The comparison that matters
| Physician loan | Conventional / agency | |
|---|---|---|
| Max financing | up to 100% | up to 97% on some programs |
| Mortgage insurance | None | Generally required above 80% LTV |
| Student debt | Documented income-driven payment | 1% of balance (Fannie B3-6-05) |
| Pre-start closing | up to 150 days | 90 days (Fannie B3-3.3-03) |
| Loan size | to $2M | $832,750 in 66 PA counties before jumbo |
| Asset depletion | Supplemental only, 3% return, US accounts | Program dependent |
| Guideline source | Lender portfolio | Agency |
| ★ Realty transfer tax | ★ Not financed | ★ Not financed |
What is no-PMI actually worth?
It removes a monthly cost that exists purely because of your down payment size. On a conventional loan above 80% loan-to-value, mortgage insurance is the price of a small deposit. The physician program prices that risk differently and does not charge it.
We are not going to put a dollar figure on it here, because it depends on the loan size, the coverage and the pricing, and we do not publish rates. We will show you both structures side by side on your own numbers.
The student-debt difference, with numbers
This is usually the decisive one. On a $300,000 balance, agency underwriting may count $3,000 a month under the 1% rule while your documented income-driven payment is a fraction of that. Against a first-year attending income, that phantom obligation is what turns an approval into a decline.
The timing difference
150 days versus 90. For an academic hire with a July start, a spring purchase sits outside the agency window and inside the physician one. Pennsylvania has a lot of July starts.
Where does FHA sit?
It is the other low-down-payment route and worth knowing the floor. HUD Handbook 4000.1 caps purchase loan-to-value at 96.5% of adjusted value, which is the familiar 3.5% minimum down payment, and sets credit tiers: a borrower at or above 580 is eligible for maximum financing, while 500 to 579 is limited to 90% LTV, meaning ten percent down.
FHA also carries its own mortgage insurance. For a physician with strong credit and heavy student debt, the physician program usually wins on both counts, but the comparison should be run rather than assumed.
★ Where the two columns are identical
Neither finances the realty transfer tax, and in Pennsylvania that is the number that matters. Philadelphia's 4.578% is cash on closing day under any loan program, and the Commonwealth's 1% plus a local rate applies everywhere else.
So the honest framing for a Pennsylvania physician is: pick the loan on debt treatment and timing, then plan the tax separately, because no loan choice changes it. The tax.
So which should I take?
If you have substantial student debt, a start date ahead of you, or a small deposit, the physician program is usually the better structure. If you have a large down payment, no student debt and a flexible timeline, conventional deserves a serious look.
We will price both on your file and show you the difference rather than recommending from a brochure. (480) 296-6513.
Frequently asked questions
Is a physician loan better than conventional in Pennsylvania?
It depends on your debt and your timing. The physician program avoids mortgage insurance at up to 100% financing, qualifies you on your documented income-driven student loan payment rather than 1% of the balance, and can close up to 150 days before a start date against the 90 days agency rules allow. With a large down payment, no student debt and a flexible timeline, conventional financing deserves a direct comparison.Does a physician loan have PMI?
No. The physician program offers up to 100% financing with no private mortgage insurance. Conventional financing generally requires mortgage insurance above 80% loan-to-value, and FHA carries its own mortgage insurance premiums. This is a lender portfolio program rather than agency financing.Will a physician loan cover my Pennsylvania transfer tax?
No, and neither will any other loan program. Realty transfer tax is cash due at closing. In Philadelphia it is 4.578% of the sale price or assessed value plus assumed debt, and elsewhere in Pennsylvania the Commonwealth's 1% applies plus an additional local rate. Choosing between a physician loan and conventional financing does not change that figure.What credit score does FHA require in Pennsylvania?
HUD Handbook 4000.1 states that a borrower with a minimum decision credit score at or above 580 is eligible for maximum financing, which is 96.5% loan-to-value on a purchase, and that a borrower between 500 and 579 is limited to 90% loan-to-value. The physician program sets its own credit requirements, which we do not publish for Pennsylvania because they are not asserted in the guideline set.Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content, not a loan commitment and not legal, tax, or licensure advice. Physician-loan program terms, eligible degrees, and overlays are set by the lender and change. Pennsylvania Primary Care Loan Repayment Program award amounts, eligibility and application cycles are set by the Pennsylvania Department of Health and change; figures here carry the date we verified them against the Department's published RFA and Fact Sheet. Realty transfer tax rates are set by the Commonwealth and by local jurisdictions and change. All loans are subject to borrower and property qualification, including credit and income review.