100% Financing Physician Loan — Arizona
By Mike Certo, Cornerstone First Mortgage · NMLS #260555 ·
The headline benefit, plainly stated
For eligible Arizona physicians, the Redwood Sequoia Medical Professionals Program allows:
- $0 down payment On a home purchase up to $1,500,000 (with 680+ FICO)
- $0 down payment On a home purchase up to $2,000,000 (with 720+ FICO)
- 5% down payment Option up to $2,000,000 (with 680+ FICO)
- No mortgage insurance (PMI/MI) at any loan-to-value ratio — including 100%
That last point is the one that breaks conventional mortgage math. On a conventional loan, anything above 80% loan-to-value requires PMI. On an FHA loan, MIP applies for the life of the loan in most cases. On a VA loan (for eligible veterans), the funding fee is a one-time hit unless you have 10%+ service-connected disability.
The physician loan eliminates the mortgage-insurance equation entirely, at any LTV the program permits.
This page covers: - The actual math (what you save) - Why lenders make this available specifically for medical professionals - Comparison vs conventional, FHA, and VA - The trade-offs and considerations
The math: what 100% LTV + no PMI saves you
Sample: $750,000 home in Arcadia, North Central Phoenix, or Mayo Scottsdale area. Current rates (May 2026): conventional 30-year ~6.50%, physician loan ~6.75%, FHA ~6.40%, VA ~6.25%.
Conventional 80% LTV (no PMI)
- Down payment required: $150,000
- Loan amount: $600,000
- Monthly P&I: $3,793
- PMI: $0
- Cash needed at close (down + closing costs): ~$162,000
Conventional 95% LTV (PMI required)
- Down payment required: $37,500
- Loan amount: $712,500
- Monthly P&I: $4,503
- PMI: ~$235/month (0.40% annually on $712.5K)
- Total monthly housing cost (P&I + PMI): $4,738
- 5-year PMI cost (until 80% LTV reached): ~$14,000
- Cash needed at close: ~$49,500
FHA 96.5% LTV
- Down payment required: $26,250
- Loan amount: $723,750
- Monthly P&I: $4,529
- Upfront MIP (1.75%, financed): $12,666
- Annual MIP (0.55%): $336/month
- MIP is for the life of the loan in most cases — over 30 years on this loan = ~$121,000 in MIP
- Cash needed at close: ~$38,000
VA 100% LTV (for eligible veterans)
- Down payment required: $0
- Loan amount: $750,000
- VA funding fee (first-use, 0% down, not waived): 2.15% = $16,125 (typically financed)
- Total loan with funding fee: $766,125
- Monthly P&I: $4,718
- No PMI
- Cash needed at close: ~$12,000 (closing costs only; no down required)
Redwood Sequoia Physician Loan 100% LTV
- Down payment required: $0
- Loan amount: $750,000
- No funding fee, no PMI, no MIP
- Monthly P&I: $4,860
- Cash needed at close: ~$10,000 (closing costs only; no down required)
Side-by-side comparison summary
| Product | Cash at close | Monthly cost (P&I + PMI/MIP) | 5-year mortgage-insurance cost | 30-year mortgage-insurance cost |
|---|---|---|---|---|
| Conventional 80% LTV | $162,000 | $3,793 | $0 | $0 |
| Conventional 95% LTV | $49,500 | $4,738 | $14,000 | $14,000 (until 80% reached) |
| FHA 96.5% LTV | $38,000 | $4,865 | $33,000 (incl upfront) | $134,000 (incl upfront) |
| VA 100% LTV (no disability) | $12,000 | $4,718 | $16,125 (one-time funding fee) | $16,125 |
| Redwood Sequoia 100% LTV | $10,000 | $4,860 | $0 | $0 |
For a Mayo Clinic physician with $50K in liquid savings, the physician loan keeps them in their savings + closes them on the home they want. Conventional 80% LTV would require liquidating retirement accounts or waiting years to save the additional $112K.
Why lenders make this product available to medical professionals
Standard mortgage underwriting assumes that any borrower at 95%+ LTV has elevated default risk — which is why PMI exists. PMI premiums fund the insurance that pays the lender if you default.
Medical professionals are an exception to this risk model:
- Default rates On physician loans run dramatically lower than conventional 95%+ LTV loans. Industry data shows physician loan default rates in the 0.1-0.3% range vs conventional 95%+ LTV default rates around 1.5-3.0% historically.
- Income trajectory For new attendings is sharply upward. The first year out of residency typically triples salary; specialty fellowships increase another 30-50%.
- Employment stability For licensed medical professionals is structurally higher than most professions. Layoffs are rare; locum and travel positions are abundant.
- Student loan structure (IBR/PAYE) makes monthly cash flow more manageable than 1%-of-balance underwriting suggests.
Lenders that specialize in physician loans (Redwood Sequoia, SoFi, KeyBank, Wintrust, BMO Harris, Truist, etc.) have built their models around this reduced-risk profile. They charge slightly higher rates than conventional in some cases — but they don't charge PMI, and they accept higher LTVs and DTIs.
The Redwood Sequoia Medical Professionals Program is one of the more competitive options on the market for AZ borrowers — Mike originates these regularly and can quote rates against any of the bank-branded physician loan products.
What "100% LTV" actually requires
To qualify for 100% LTV up to $2M, the Redwood Sequoia program requires:
- 720+ FICO (highest tier qualifying for $2M at 100%)
- One eligible professional designation (MD, DO, DDS, DMD, PharmD, DVM, DPM, CRNA-DNAP/DNP, or resident/fellow/intern with one of these degrees)
- Primary residence only (no second homes, no investment property)
- 1-unit only (single-family residences; no multi-unit or condo-tels)
- US Citizen or Permanent Resident With valid SSN
- DTI 45% or below For LTV >95% scenarios (higher LTV = stricter DTI)
- Mortgage history 0x30x12 (no 30-day-late mortgage payments in last 12 months)
- Verification of Rent 0x30x12 (if currently renting, no late rent payments in last 12 months)
- Manual underwrite (no AUS shortcuts; underwriter reviews everything)
- No second/secondary financing (for LTV ≥90.01% scenarios)
- Escrow / impound accounts required For LTV ≥90.01% (insurance + property tax escrowed monthly)
For 680-719 FICO borrowers, 100% LTV is still available up to $1.5M (instead of $2M).
For 95% LTV scenarios (5% down option), the qualifying bar is slightly easier — DTI cap goes to 50%, and you can choose to put down anywhere from 5% to 100%.
Comparison: physician loan vs other 0%-down options
In Arizona, the realistic 0%-down options for an eligible borrower are:
| Product | Eligibility | Notes |
|---|---|---|
| VA loan | Veteran or active-duty military with qualifying service | $0 down, no PMI, but funding fee (unless 10%+ disability rated). Conforming + jumbo limits apply. |
| USDA loan | Rural property + income limits | $0 down, no PMI for life of loan, but property must be in USDA-eligible rural area (very limited in metro Phoenix; meaningful in Pinal, Yavapai, Cochise counties). |
| Physician loan | Eligible medical professional | $0 down up to $1.5M-$2M, no PMI, higher loan limits than conventional. |
| State DPA programs | First-time buyer, income/AMI limits | Cover 3-5% of down payment, but not 100% LTV — you still need 95%+ LTV financing underneath. |
For a Phoenix physician who isn't a veteran and isn't buying a rural USDA-eligible property, the physician loan is the only realistic 0%-down option at the loan amounts (typically $500K-$2M) that match the housing market they're shopping in.
What you trade off (and what you don't)
You DO trade off
- Slightly higher rate than conventional (typically 0.125-pricing varies by file specifics when conventional is available at 80% LTV)
- Higher monthly payment than 80% conventional (because you're financing more)
- Manual underwrite means slightly longer underwriting time (typically 30-45 days vs 21-30 for conventional automated underwrite)
- No second/secondary financing Allowed at 90%+ LTV
You DON'T trade off
- Mortgage insurance (PMI/MIP) of any kind
- Higher rate than FHA in most cases (physician loan is typically lower)
- Higher rate than VA in most cases (similar; varies by week)
- Lower loan limits (physician loan caps at $2M, much higher than conforming $832,750)
- Worse DTI treatment (physician loan is more lenient than conventional)
- Worse student loan treatment (physician loan uses IBR payment; conventional uses 1% of balance)
- Worse new-attending qualification (physician loan accepts signed employment contract; conventional won't)
Common questions
Is there a catch?
There's a slight rate premium (typically 0.125-0.375% above conventional 80% LTV), and the manual underwrite takes a bit longer than automated conventional underwriting. There's also a $2M loan cap. Beyond those, no catch — the no-PMI math is a real, structural advantage for eligible professionals. {#faq-catch}
Will I have to refinance later to get rid of PMI?
No PMI = no refinance needed to remove PMI. With FHA, most borrowers refinance to conventional once they reach 80% LTV to eliminate ongoing MIP. With the physician loan, you can stay in your original loan for the full 30-year term without that refinance pressure. {#faq-refinance-pmi}
What if my home value goes down?
Same as any other mortgage — the loan amount doesn't change with home value. If you're underwater for some reason (which is rare in AZ markets, but happens during corrections), you have the standard options of holding through the correction, refinancing if rates drop significantly, or selling (at a loss). The 100% LTV at origination means you start with no equity buffer — so home value declines hit harder than they would on a 20%-down conventional loan. This is the genuine downside of 100% financing — call it a risk, not a catch. {#faq-home-value-decline}
How much will my closing costs be?
For a $750K Arizona home, expect $10,000-$15,000 in closing costs (lender fees, title insurance, county recording, escrow setup, prepaid property taxes + insurance). With the physician loan, these are the ONLY cash you bring to close — no down payment. Seller concessions can sometimes cover a portion of these. {#faq-closing-costs}
Can I put MORE down than 0% if I want?
Yes, anywhere from 0% to 100%. Some physician loan borrowers put 10-20% down to keep monthly payment lower or to reduce the loan amount below jumbo thresholds for refinance flexibility later. The product allows whatever down payment level you choose; the 100% LTV is the maximum, not a requirement. {#faq-more-down}
Are there any first-year payment shocks I should know about?
No. Standard 30-year fixed payment is the same every month (other than property tax + insurance escrow adjustments, which apply to any loan). The physician loan is not a teaser-rate or graduated-payment product. {#faq-payment-shock}
Can I use gift funds?
The down payment requirement is $0 in the 100% LTV scenario, so gift funds don't apply for down payment. Gift funds can sometimes cover closing costs depending on lender overlays — Mike will walk through whether your specific scenario allows this. {#faq-gift-funds}
What about cash reserves?
The Redwood Sequoia program does not require traditional 2-month reserves for primary residence purchase scenarios at 100% LTV. Some borrowers volunteer to document reserves to strengthen the application; Mike will advise based on your specific scenario. {#faq-reserves}
Talk to Mike about the math for your scenario
The numbers above are illustrative. For YOUR home, YOUR savings, YOUR student loans, and YOUR target neighborhood — the actual numbers will be specific to you.
Free 30-minute call. Bring your situation. Mike will run the actual conventional vs FHA vs VA vs physician loan comparison for your real numbers.
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(480) 296-6513 · Mike Certo, NMLS #260555 · Cornerstone First Mortgage NMLS #173855
Sources
- Redwood Residential Acquisition Corporation — Sequoia Medical Professionals Program Eligibility Guide v1.1 (effective March 2, 2026)
- FHA Single Family Housing Policy Handbook 4000.1 — MIP rules
- VA.gov — Funding Fee and Closing Costs
- Fannie Mae Selling Guide B7-1-02 — Mortgage insurance coverage
Mike Certo NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content, not a loan commitment. Program features per Redwood Sequoia Medical Professionals Program Guide v1.1. Specific eligibility, rates, and approval terms depend on individual qualifications. Loans subject to buyer and property qualification.