If you have just finished residency, you are in a strange spot. Your income is about to jump, but on paper you look like someone with no history. A physician mortgage is built for exactly that gap.
I meet a lot of doctors at this stage. Some have a signed contract and a start date. Some are doing locums while they decide where to settle. A few are already thinking about incorporating. Each of those changes which lender I would choose, so let me walk you through how I think about it.
What a physician mortgage in Canada actually is
A physician mortgage is a regular Canadian mortgage with one big difference: the lender agrees to look at your projected or contracted income instead of waiting for two years of tax returns. Scotiabank, for example, publishes sample qualifying incomes of $225,000 for a new family physician and $300,000 for a new neurosurgeon. Other lenders set their own figures, and some lean more on the contract you have signed.
It is not a US style doctor loan. There is no zero down option in Canada, and you still pass the federal stress test at the higher of your contract rate plus 2% or 5.25%. I compare the two in my guide to US doctor loans and Canadian programs.
The new to practice window is shorter than you think
Lenders only treat you as new to practice for a limited time. RFA's medical professional program, for example, covers physicians within 24 months of finishing residency or fellowship. Scotiabank's own material mentions both two and three years. If you are getting close to the end of that window, compare your options before it closes, because after that most lenders will want your tax returns.
Can you buy before your start date?
Often, yes. Many lenders will approve a physician who has a signed contract and a start date in the near future, usually within a few months of closing. They look at the contract itself, how you will be paid and when you start. Share all three with me early and I can tell you which lenders will be comfortable with your file.
Fee for service, LFP and salaried income
How you are paid matters more than most new doctors expect. Lenders usually treat fee for service billings, including the LFP payment model in British Columbia, as self employment income. That is fine in your first years, because physician programs are designed for it. Later, once you have a billing history, lenders read your tax returns, and the way you report income starts to matter a great deal.
Locum income can count too. How much weight a lender gives it depends on how long you have been doing locums and whether a permanent position is lined up. I wrote more about this in my guide for locum and fee for service physicians.
Should you incorporate before or after you buy?
Many physicians buy first and incorporate after. Incorporating changes the documents a lender sees, because salary, dividends and money you leave in the corporation are all treated differently. If you plan to incorporate in the next year or two, tell me at the start so I can pick a lender that reads corporate income well. My guide for incorporated physicians goes deeper.
Your student line of credit is still in the picture
That professional line of credit from school does not disappear when you finish training. Lenders still count a monthly payment for it, and they still calculate that payment differently. Some use the balance and others use the limit. Paying it down before you apply can help, but so can simply choosing the right lender. You can test both in the physician affordability calculator.
What to have ready
- Your signed contract, offer letter or confirmation of privileges
- Your provincial College of Physicians and Surgeons licence, or your application
- How you will be paid: fee for service, LFP, salaried or sessional
- Your line of credit statement and any other debts
- Down payment statements
- Your start date
Buying in BC, Alberta or Ontario
Closing costs change a lot depending on where you settle. In British Columbia, first time buyers pay no property transfer tax on homes up to $835,000. Alberta has no land transfer tax, only Land Titles fees. Ontario charges land transfer tax with a first time buyer refund of up to $4,000, Toronto adds its own tax, and the 8% sales tax on mortgage insurance has to be paid in cash. The closing cost calculators show the numbers for each province.
My advice for new physicians
Talk to someone before you sign a lease or commit to a city. The best time to plan a physician mortgage is when you are choosing between contracts, not after you have picked a house. A ten minute conversation about how you will be paid and when you start can save you from a lender that does not fit. There is more on my new to practice page.
If you are ready, tell me about your contract and timing and I will compare physician programs from the banks and from lenders that only work through brokers.
