Is Private Mortgage Insurance Required for Physicians?

At Ficzner Group, we want to be prepared to ensure that you are given the best buying experience with knowledge and expertise to guide you along the way. We are here to guide you on purchasing a brand new home in Ohio.

Today I would like to talk to you about Is Private Mortgage Insurance Required for Physicians?

No, many physicians can avoid private mortgage insurance because specialized physician mortgage programs often remove PMI even with low down payments, while traditional loans typically require it when putting less than 20% down.

Why Do Physicians Ask About PMI So Often?

For many physicians, the homebuying power timeline happens right after years of training, delayed income, and heavy student debt. Cash reserves matter. Every monthly expense matters. And PMI often feels like a penalty for not having a large down payment ready immediately.

The decision point usually looks like this:

You want to buy soon
You don’t want to drain savings
You want predictable monthly costs

That’s where PMI becomes a critical question, and where physician-specific lending programs change the equation.

What Exactly Is Private Mortgage Insurance?

Private mortgage insurance is protection for the lender, not the borrower, if the loan defaults. It’s typically required when a buyer puts down less than 20% on a conventional mortgage.

From the lender’s perspective:

Smaller down payment = higher risk
PMI = insurance against that risk

From the borrower’s perspective:

PMI = added monthly cost with no equity benefit

Typical PMI costs:

• 0.3%–1.5% of the loan annually

• Roughly $150–$600+ per month depending on purchase price

That money does not reduce your loan balance. It’s purely protective overhead.

When Is PMI Normally Required on Traditional Loans?

Under standard mortgage guidelines, PMI usually applies when:

• Down payment is under 20%

• Loan is conventional

• Underwriting follows traditional risk models

Common structure:

5% down → PMI required
10% down → PMI required

15% down → PMI required
20% down → PMI avoided

This is why many buyers delay purchasing for years while saving. Physicians often have access to a different structure.

Why Do Physician Mortgage Programs Often Remove PMI?

Lenders view physicians differently from the average borrower.

Key risk factors that work in a physician’s favor:

• High long-term earning trajectory

• Strong employment stability

• Professional licensing barriers

• Historically low default rates

• Predictable income growth

Because physicians are statistically low-risk borrowers, many lenders eliminate PMI even with 0–10% down financing.

Instead of PMI, lenders may manage risk by:

• Slight interest rate adjustments

• Loan caps

• Credit score requirements

• Reviewing employment contracts

This allows physicians to buy earlier without the standard low-down-payment penalty.

For a related decision framework, see: Should Physicians Buy Before the Spring Market?

How Much Money Can Avoiding PMI Save a Physician?

PMI adds up faster than most buyers expect.

Example:

$600,000 home
5% down
PMI = $350/month
5 years of PMI = $21,000

That $21,000 could instead fund:

• Student loan reduction

• Retirement investing

• Emergency reserves

• Practice setup costs

• Family expenses

Avoiding PMI isn’t just convenient, it’s financially material.

Do All Physician Loans Automatically Eliminate PMI?

No. Physician loans vary by lender.

Some lenders:

• Remove PMI entirely

• Replace PMI with higher interest rates

• Add risk pricing above certain loan limits

• Adjust based on credit profile

This is why physicians should compare the full loan structure, not just the PMI label.

Important evaluation factors:

• Interest rate

• Total lifetime cost

• Cash required at closing

• Payment stability

• Refinance flexibility

  PMI is one variable, not the whole equation.

  When Might Paying PMI Still Be a Strategic Choice?

  Avoiding PMI is ideal but not always mandatory.

  Situations where PMI may still make sense:

  • You want the absolute lowest rate

  • You plan to refinance quickly

  • You expect rapid home appreciation

  • You will reach 20% equity soon

  • A specific lender offers better overall terms

  PMI is not permanent. Once equity reaches 20%, removal is often possible.

  Some physicians accept temporary PMI to buy sooner rather than delay their housing timeline.

  How Does Opportunity Cost Affect a Physician’s Decision?

  Early-career physicians often benefit more from liquidity than maximum equity.

  Consider:

  Option A: 20% down → no PMI → depleted savings
  Option B: 5–10% down → preserve cash → invest or build reserves

  For high-income professionals, tying up large capital in a down payment can create opportunity cost that outweighs PMI itself.

  This is one reason physician loans with low down payments and no PMI are attractive: they protect flexibility.

  What Should Physicians Ask a Lender About PMI?

  Before choosing a loan, ask:

  • Is PMI required?

  • If not, how is risk priced?

  • Are rates higher to compensate?

  • Can PMI ever be added later?

  • How does this compare to other options?

  • What happens after refinancing?

  A transparent lender explains total math, not just monthly payment.

  Final Thoughts

  PMI is a major cost for many homebuyers but physicians often qualify for structures that remove it entirely.

  That advantage exists because lenders understand the financial arc of medical professionals. Physician mortgage programs are built to reduce early-career financial pressure, not add to it.

  The goal isn’t simply avoiding PMI.

  The goal is choosing a mortgage that supports:

  • Liquidity

  • Student debt management

  • Career flexibility

  • Long-term wealth building

  • Reduced financial stress

  For physicians, PMI is just one piece of a larger strategic decision.

  Source.. KCM Mike Ficzner Blog

  The Ficzner Group is a technology-driven local real estate company that serves the Lake, Geauga & Cuyahoga County areas. Our sales team of Zillow Premier Agents use advanced search technologies that make searching the web seamless and marketing your home instant within the Zillow & Trulia Marketplace.

  To connect with us directly,

  Please call Mike at 440-305-6349

  Or via email:  REALESTATE@FICZNER.COM

  Visit us at www.ficzner.com- Call or text 440-305-6349 for more information.