Updated · Mike Certo, NMLS #260555
Arizona Physician Loan Student Loan Treatment Guide
Student loan treatment is one of the biggest qualifying differences between physician loans and conventional loans. The exact rules depend on your career stage — resident, fellow, or attending — and which income you're qualifying on. Here's how it actually works.
Residents and fellows qualifying on resident/fellow income
If you're currently in residency or in a medical clinical fellowship AND you're qualifying on your current resident or fellow income, deferred and Income-Based Repayment student loans are excluded from your DTI calculation under the Redwood Sequoia program.
Applicable repayment plans excluded from DTI:
- Deferred (loans currently in active deferment)
- Income-Based Repayment (IBR)
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE / SAVE)
- Forbearance (if documented)
This is a meaningful advantage. Many residents and fellows have $200,000-$500,000+ in student loan balances. Excluding those balances from DTI calculation is what makes 100% LTV pricing accessible to residents.
Residents qualifying on projected attending income
If you're a resident or fellow with a signed attending offer letter and you want to qualify on the projected attending income (because the attending income supports a higher purchase price), student loan treatment changes:
- You're no longer in the "resident/fellow on resident income" exclusion category
- Student loan payment must use credit-report payment, or 1% of balance if $0, or fully amortized payment
This is a trade-off. Higher purchase price capacity vs higher DTI from student loan inclusion. Often residents qualifying on attending income can still afford their target purchase — the math depends on your specific student loan balance and target purchase price.
Post-attending borrowers
Once you're an attending physician (no longer in residency or clinical fellowship), standard student loan treatment applies:
- Credit-report payment is used in DTI calculation
- If credit-report shows $0 payment, qualification uses one of:
- IBR payment per documentation
- 1% of outstanding loan balance (per most programs)
- Fully amortized payment per documentation
PSLF and student loan strategy
If you're pursuing Public Service Loan Forgiveness (PSLF) or planning a 10-year forgiveness strategy, that affects your overall financial planning — but does NOT change DTI calculation for the mortgage. PSLF forgiveness happens after 10 years of qualifying payments at a qualifying employer; for the mortgage, we use the current payment status.
Not financial, tax, or student-loan advice. Consult your loan servicer and financial advisor for strategy specific to your situation.
Student loan documentation checklist
- Most recent student loan statements showing balance and monthly payment
- If in IBR/PAYE/REPAYE: Documentation of repayment plan election
- If in deferment: Documentation of deferment status
- Credit report (we pull this — you don't need to bring it)
- Signed offer letter or employment contract (residents qualifying on attending income)
Next step
20-minute call. Bring student loan balance, current repayment plan, current career stage, target purchase area and price. We model your scenario both ways (resident income vs attending income) so you can see the trade-off.
Related
FAQ
Are deferred student loans really excluded from DTI?
Yes, when borrower is currently in residency or clinical fellowship AND qualifying on resident/fellow income under the Redwood Sequoia program. Other career stages use the credit-report payment.
Does qualifying on attending income help?
Depends — higher income lets you buy more, but student loan payment counts against DTI. We model both scenarios so you can see the trade-off.
Does PSLF strategy change the mortgage qualifying?
No. PSLF affects long-term student debt strategy but not current DTI calculation. We use your current payment status.
What if my credit report shows $0 payment?
Underwriting uses one of: IBR documentation, 1% of balance, or fully amortized payment. The specific rule depends on the loan program; we walk through which applies to your file.