Private Practice Pain Doc

Like many millennials, I had a very difficult time finding a home for our family. List prices and availability were already hurdles, but I thought I would at least be able to take advantage of so-called “doctor loans”. However, I was disappointed to find that being a business owner disqualified me from this particular lending product.

Owning a business might mean freedom and autonomy, but when it comes to securing a home loan, entrepreneurs face unique challenges:

1. Variable Income: Unlike salaried workers with predictable earnings, business owners have fluctuating incomes. This unpredictability can concern lenders, who prioritize stability.

2. Complex Financials: Entrepreneurs often claim deductions and reinvest in their business, reducing their taxable income. This can be financially savvy, but it presents a skewed picture to lenders evaluating their ability to repay loans.

3. Higher Risk Profile: Businesses are susceptible to economic changes. If a company falters, it might impact the owner’s ability to maintain mortgage payments, leading lenders to perceive entrepreneurs as riskier borrowers.

4. Debt-to-Income Ratio: Many business owners have substantial initial debts, which can unfavorably influence their debt-to-income ratio, a key factor in loan eligibility.

5. Documentation Overload: The paperwork for business owners can be daunting. Beyond personal financial records, they’re often required to present extensive business documentation, from profit and loss statements to business licenses.

In general, regional banks are more likely to lend to entrepreneurs than big banks, but expect to have to put a down payment of up to 20%. Having the right real estate agent who has good relationships with lenders is key, as there are numerous types of lending products that you may qualify for, like secondary residence mortgages and portfolio loans. At times it feels unfair to have so many extra hurdles to home ownership as a physician business owner, but unless you can pay for a home entirely in cash, you have to play the bank’s games.