Reading a doctor loan Loan Estimate against a conventional one: APR, PMI and the ARM table
TRID gives you two standardized forms that make a doctor loan and a conforming quote directly comparable. Look at the APR, the projected payments table, the “In 5 Years” box and the total interest percentage rather than the headline rate.
Getting a Loan Estimate on contract income
A lender must deliver the Loan Estimate within three business days of receiving six items: name, income, Social Security number, property address, estimated value and loan amount. Income is what you state, so a physician can trigger the LE with the salary in the signed contract before the job starts; the lender may not demand documents, including the contract itself, as a condition of issuing the form. A lender that “needs the executed contract and license before we can give you numbers” is describing its underwriting, not the rule. Once you have an address under contract, you can collect three LEs in three days and compare them.
Where the two forms differ for this product
Put the doctor loan LE next to a conventional or jumbo LE at the same purchase price. On page 1, the projected payments table for a conforming 95% loan shows a mortgage insurance line with a note on when it may end; the doctor loan shows none, but its principal and interest line is higher because the rate is. On page 3, the APR absorbs lender fees and, where applicable, mortgage insurance, so a conventional loan with cancellable PMI can show a higher APR than a doctor loan with a higher note rate — and still cost less over fifteen years because the APR assumes you keep the loan to term. The “In 5 Years” box and the total interest percentage are better short-horizon comparisons for someone likely to refinance or move after training. Our closing costs guide walks through the fee sections.
The adjustable-rate table on a 7/6 ARM
If the doctor loan is an ARM, the LE must include an adjustable interest rate table with the index, margin, initial rate, minimum and maximum rate, first change date and the limits on each change. The projected payments table then shows the payment range in the adjustment years. A 10/6 ARM at a lower rate with a lifetime cap five points higher is a different product from a 30-year fixed, and the LE is the only document that states the caps in plain numbers before you lock.
Tolerances and the relationship discount
Lender origination charges and fees paid to the lender’s affiliates cannot increase from the LE to the Closing Disclosure; third-party services you are allowed to shop for from the lender’s list may rise 10% in aggregate. A relationship discount that depends on opening an account is part of the rate and points, so if you decide not to open the account, the lender will issue a revised LE citing a changed circumstance. Review it: a revised LE resets the tolerance baseline, and the “changed circumstance” must be real, not a repricing of the same file.
Closing Disclosure timing for a relocating borrower
You must receive the Closing Disclosure three business days before consummation, counting Saturdays and excluding Sundays and federal holidays. If the APR moves more than an eighth of a point, the product changes (fixed to ARM) or a prepayment penalty appears, a new three-day period starts. Physicians closing the week before orientation have no slack for that; lock the product early and avoid last-minute rate changes.
What to check
- Request LEs from at least two lenders once you have the six application items; no lender may require the employment contract to issue one.
- Compare the “In 5 Years” box and total interest percentage, not just APR, if you expect to refinance or relocate after training.
- Verify the ARM table: index, margin, first-change date, per-change cap and lifetime cap.
- Any lender or affiliate fee that rises between LE and CD is a tolerance violation refundable at or within 60 days after closing.
- Keep three full business days between the Closing Disclosure and closing; a product or APR change restarts the clock.
Frequently asked questions
Why does the doctor loan show a lower APR than the conventional loan with PMI?
The APR on a conventional loan includes mortgage insurance for as long as the form assumes it remains, which inflates the figure, while the doctor loan prices its risk into the note rate without a separate premium. The APR is computed over the full term; if you plan to keep the loan five to seven years, compare the “In 5 Years” totals and the monthly payment after PMI cancellation instead.
Can the lender refuse a Loan Estimate until my contract is verified?
No. The Loan Estimate is due within three business days after the lender has your name, income, Social Security number, the property address, an estimated value and the loan amount. Verification documents, including the employment contract, may be requested afterward but cannot be a precondition. You may use the LE from one bank to negotiate with another.
The rule in full: TRID: the Loan Estimate and Closing Disclosure. The borrower profile: Physicians and licensed professionals. Related guides: Jumbo loans: requirements, rates and how they differ from conforming · PMI for first-time buyers: what it costs and how to get rid of it · Closing costs explained: what is negotiable, what is not · Pre-approval vs pre-qualification: what sellers actually respect.
Other federal rules for physicians and licensed professionals
TILA / Reg Z · RESPA · ECOA · Fair Housing Act · HMDA · SAFE Act / NMLS · ATR / QM · HOEPA · HPA / PMI · Servicing rules · FCRA · Flood insurance · MARS rule · SCRA · LO compensation
TRID disclosures for other borrowers
First-time buyers · Conventional borrowers · Veterans · Self-employed · Investors · Retirees · Bad credit · Foreign nationals · Heroes · Rural buyers · Condo & second home · Refinancing