The headline feature of a physician mortgage is what it lets you skip: the down payment. Most programs allow doctors, dentists, and pharmacists to buy with 0% down and no PMI — a combination no other mortgage product offers at scale. That's powerful. It's also frequently misused.
The fact that you can put 0% down doesn't mean you should. The right answer depends on math that includes your mortgage rate, your alternative use of cash, your tax bracket, your emergency-fund adequacy, and how long you actually expect to own the home. With physician-loan rates sitting in the 6.5%–7.0% band this spring and high-yield savings still paying around 4.25%–4.5%, the trade-off is sharper and more individual than the marketing suggests.
Here's how to think about it.
What physician programs typically offer
Most physician-loan portfolios price down payment in tiers. Exact numbers vary by lender, but a representative ladder looks like this:
- 0% down — full purchase price financed; highest rate tier
- 5% down — modest rate improvement, no PMI
- 10% down — better rate, often the sweet spot
- 20% down — best rate; often comparable to a strong conventional quote
The rate gap between the 0% tier and the 20% tier on the same lender, same file, is commonly 0.125% to 0.50%. On a $700,000 loan over 30 years, a 0.25% rate difference is roughly $36,000 in lifetime interest — meaningful, but smaller than most borrowers assume.
The cash math: opportunity cost vs. mortgage cost
The core question is whether the cash you'd put toward a down payment earns more deployed elsewhere than the after-tax cost of borrowing it.
A simplified version: if your physician-mortgage rate is 6.625% and you itemize so the after-tax cost is roughly 5.0% in a 25% marginal bracket, your "hurdle rate" for keeping cash is 5.0%. Today, a high-yield savings account or T-bill ladder yields about 4.25%–4.5% — below the hurdle. A diversified taxable brokerage might pencil to 6%–8% expected long-term, above the hurdle, but with volatility you may not want sitting next to a brand-new mortgage.
Most physicians who don't itemize get a less favorable answer: at a 6.625% pre-tax cost vs. 4.5% on cash, putting cash down beats holding it in HYSA, all else equal.
What this means in practice: 0% down is most attractive when (a) you have a clear higher-yielding deployment for the cash (loan paydown at higher rates, employer-match retirement contributions, taxable equity portfolio for a long horizon) and (b) you don't need the liquidity for emergency reserves, malpractice tail coverage, practice buy-in, or fertility/family planning.
The four scenarios where 0% down genuinely wins
1. You have higher-rate debt to retire. If you carry student loans at 7%+ or any consumer debt at 8%+, paying those off with the cash you'd otherwise put down beats the mortgage math cleanly. The down payment buys you ~6.5% relief; the loan paydown buys you 7%+ relief.
2. You're maxing tax-advantaged space and have room for more. Backdoor Roth, 401(k)/403(b) match, HSA, 457(b), 529 — every dollar you redirect from down payment to maxed tax-advantaged space compounds tax-deferred or tax-free. For a 35-year-old attending, that math usually wins over 30 years.
3. You're not staying long. If you'll likely sell within 3–5 years (residency exit, fellowship, partner-track relocation), down payment dollars don't compound — they sit as locked equity. Closing costs and selling costs eat much of any modest appreciation. Keeping cash liquid is often the better play.
4. Your emergency fund and contract certainty are thin. Residents and new attendings without a 6-month emergency fund and a fully signed/credentialed contract should preserve liquidity. A signed contract that hasn't credentialed yet is not the same as cash.
The four scenarios where 10% or 20% down wins
1. You'll stay 7+ years. Longer horizons amortize closing costs and let modest appreciation work. Lower LTV also keeps you flexible if rates fall and you want to refinance into a conventional loan at a tighter spread.
2. You're rate-sensitive and cash-rich. If you have $300K+ in liquid taxable assets beyond your emergency fund and tax-advantaged contributions are already maxed, the marginal dollar of brokerage isn't earning much in tax efficiency. Putting some down to capture the rate-tier discount is reasonable.
3. The lender's rate gap is wider than typical. Some portfolios price 0% down 0.50%+ above 20% down. On a $1M loan that's roughly $145,000 in lifetime interest — large enough to overwhelm most opportunity-cost arguments. Always ask for the full rate sheet by LTV tier, not just the rate quoted at your assumed down payment.
4. You want to avoid being underwater. With national price growth projected at just 2%–4% for 2026, a 0%-down buyer in a soft Sun Belt market could be modestly underwater on day one after closing costs. That's not a crisis, but it is a constraint on flexibility.
The middle path most attendings actually use
In practice, many doctors, dentists, and pharmacists land at 5% or 10% down. It captures most of the rate-tier discount, leaves a meaningful cash cushion, and avoids the "all-in on house" feeling that 20% creates for someone who's just escaped six-figure student debt. There's no prize for being all-or-nothing on this decision.
A 5-question decision checklist
If you can answer "yes" to questions 2–5 and the rate gap is wide, lean toward more down. If you answer "no" to one or more, the 0% feature of a physician loan is doing its real job — preserving liquidity for higher-impact uses while you settle into your career.
MedPharmaConnect is for educational purposes only. We are not a lender. Talk to a licensed loan officer and a fee-only financial planner about your specific numbers before committing to a down payment strategy.