5 Mistakes Doctors Make When Buying Their First Home

A couple of years ago, I worked with an orthopedic surgeon who had just finished fellowship. He'd been living in a 700 square foot apartment for seven years. His starting salary was $485,000. He called me ready to buy "the house I deserve after all this training."

Three months later, he was stressed, cash-poor, and realizing that his 5,500 square foot custom home with a pool and separate guest house might have been too much too soon.

He didn't do anything wrong according to conventional wisdom. He could afford the payments. He qualified for the loan. His income supported the purchase. But he made the same mistake I see countless physicians make when buying their first home.

Actually, he made several of them.

After working with hundreds of physicians on their first home purchase, I've identified the five mistakes that cause the most regret. Some are financial. Some are practical. All of them are avoidable.

Mistake #1: Buying Too Much House Too Fast

This is the most common mistake, and it's completely understandable.

You've spent 11-15 years in training. You've lived in small apartments. You've watched friends from college buy houses, start families, accumulate wealth—while you made $55,000 a year and accumulated $300,000 in debt.

Now you're an attending. Your income just tripled or quadrupled. You can finally afford a nice home. And lenders are telling you that you qualify for $1.5 million or more.

The temptation to go big is overwhelming.

But here's what I tell every new attending: Your first year of practice is a financial transition year, not a wealth-building year. You have new expenses you've never had before—malpractice insurance, professional memberships, board exam fees, wardrobe upgrades, retirement contributions, student loan payments resuming.

I worked with an anesthesiologist last year who bought a $1.2 million home immediately after finishing residency. Her payments were affordable—about $7,500/month including property taxes and insurance. She made $380,000 per year.

But she hadn't factored in:

• $2,100/month in student loan payments (she'd been in deferment)
• $1,800/month in disability and life insurance
• $2,000/month she'd need to max retirement accounts
• $400/month in new professional expenses
• State income taxes she hadn't paid as a resident in Texas

Within four months, she was making more money than she ever had but felt poorer than she did in residency. She couldn't go out to dinner without checking her bank account first.

What to do instead:

Buy less house than you qualify for in year one. I usually recommend capping your purchase at 2-2.5x your gross income for your first home. For a $350,000 income, that's $700,000-$875,000.

Yes, you'll qualify for more. No, you shouldn't take it.

Live in that house for 2-3 years. Get used to attending-level expenses. Build up savings. Max out retirement accounts. Then, if you want to upgrade, you'll be doing it from a position of financial strength instead of financial stress.

Mistake #2: Ignoring the True Cost of Homeownership

Mortgage payment is not the cost of owning a home. It's maybe 60-70% of the cost.

I see physicians who carefully budget for their mortgage payment but are blindsided by everything else. Here's what your house actually costs:

Monthly expenses beyond the mortgage:

• Property taxes: Varies wildly by location. In Texas, expect 2-2.5% of home value annually. In California, around 1.1%. On a $900,000 home in Texas, that's $1,875/month just in taxes.

• Homeowner's insurance: $200-$600/month depending on location, coverage, and home value. More in hurricane/tornado zones.

• HOA fees: If applicable, $100-$600/month for standard HOAs. Luxury communities can be $1,000+.

• Utilities: Usually 2-3x what you paid in an apartment. A 4,000 square foot house in Phoenix might run $400/month in summer cooling costs alone.

• Lawn care/landscaping: $150-$500/month if you're not doing it yourself.

• Pool maintenance: $150-$300/month if you have a pool.

Annual expenses you'll forget about:

• Maintenance: Budget 1-2% of home value per year. For a $750,000 home, that's $7,500-$15,000 annually.

• Major repairs: HVAC systems die. Roofs leak. Water heaters burst. Plan for $5,000-$20,000 in random expenses annually.

• Furniture and decoration: Empty rooms look sad. You'll spend $20,000-$100,000 furnishing your first real home.

Example from an actual client:

Cardiologist, $450,000 income, bought a $975,000 home in a Dallas suburb. Here's what she pays monthly:

• Mortgage (principal + interest): $5,200
• Property taxes: $1,700
• Homeowner's insurance: $380
• HOA: $175
• Utilities: $450
• Lawn care: $200
• Pool service: $175
• Pest control: $45

Total: $8,325/month (not $5,200)

She almost didn't buy because she thought she could only afford $5,500/month in housing. Once we broke down the real numbers, she realized she needed to look at homes under $700,000—and she found a great one.

What to do instead:

Before house hunting, calculate your total housing budget—not just what you can qualify for on a mortgage. Include property taxes (look these up for specific neighborhoods), insurance, HOA fees, and estimated utilities. Add 15% for maintenance and surprises.

The mortgage payment should be roughly 60-65% of your total housing budget, not 100%.

Mistake #3: Not Understanding Your Local Market

Medicine is geographically flexible in ways that many professions aren't. You can practice in Boston or Birmingham. San Francisco or Syracuse. And where you choose to live has enormous implications for your home purchase.

I've worked with physicians who treated every market the same way. They shouldn't.

Example: Two emergency medicine physicians, same income

Dr. A took a job in Nashville, Tennessee. Starting salary: $320,000. No state income tax. Housing costs: Reasonable.

Dr. B took a job in San Jose, California. Starting salary: $350,000. State income tax: ~$30,000. Housing costs: Astronomical.

Dr. A bought a 3,500 square foot home in a great neighborhood for $650,000.

Dr. B could barely afford a 1,600 square foot townhouse for $1.1 million.

Dr. B actually makes less take-home money AND lives in a much smaller home. The $30,000 "higher salary" disappeared into state taxes and barely made a dent in the housing cost difference.

What you should know about your market:

1. Price per square foot: In Phoenix, you can buy 2,500 square feet for $500,000. In Seattle, that same money gets you 1,200 square feet. Know what's normal before you start shopping.

2. Property tax rates: Some states and counties have dramatically higher property taxes. A $600,000 home in New Jersey might have $15,000/year in property taxes. The same value home in Colorado might be $4,000/year.

3. HOA culture: In some markets (Arizona, Florida, Texas suburbs), almost everything is in an HOA. In others (Northeast older neighborhoods), HOAs are rare. Budget accordingly.

4. Appreciation history: Some markets have appreciated 50%+ in the past five years. Others have been flat. This doesn't predict the future, but it tells you about local demand.

5. Rental vs. buy math: In some high-cost markets, renting is actually cheaper than owning for the first few years. Don't assume buying is always the better financial choice.

What to do instead:

Spend time understanding your specific market before house hunting. Look at sold prices, not listing prices. Talk to colleagues who bought recently. Research property taxes for specific neighborhoods (they vary within cities).

If you're moving to a new city for your first attending job, consider renting for 6-12 months first. This lets you learn the neighborhoods, understand commutes, and make a more informed purchase decision.

Mistake #4: Skipping the Pre-Approval Process

I'm constantly amazed by physicians who spend six months researching which hospital to work at, then spend two weekends picking a house and wonder why things go wrong.

The most common version of this mistake: Starting to look at houses before getting pre-approved, falling in love with a specific property, then scrambling to get financing and losing the house to someone who was ready.

But there's a more subtle version too: Getting a generic pre-approval from one lender without shopping rates or understanding your options.

What actually happens without proper pre-approval:

You find a house you love. You make an offer contingent on financing. The seller accepts because your offer was highest.

Then you apply for a mortgage. And you discover:

• Your student loan debt calculation at this lender is different than you thought
• Your employment contract has a clause that creates issues
• Your credit score is 15 points lower than you expected
• The loan program you wanted doesn't work for this property type

Now you're scrambling. You might lose the house. You might have to accept worse terms. You definitely have unnecessary stress.

What a real pre-approval looks like:

A pre-approval letter from a lender means almost nothing. Getting one takes five minutes online. What you actually need before house hunting:

1. Full application submitted: Not a quick questionnaire. The full 1003 application with income, assets, debts, and employment details.

2. Documents reviewed: Your lender has looked at your pay stubs, bank statements, employment contract, and student loan documentation.

3. Credit pulled and analyzed: You know your actual credit score and any issues that need addressing.

4. Loan options discussed: You understand the different programs available to you, their rates, and their requirements.

5. Rate quotes obtained: You have actual rate quotes, not generic ranges from websites.

This process takes a few days, not five minutes. But it means when you find the right house, you can make a strong offer immediately with confidence that you'll close.

What to do instead:

Get fully pre-approved 30-60 days before you plan to seriously start house hunting. Not pre-qualified (that's worthless). Pre-approved with full documentation review.

Get quotes from at least three physician mortgage lenders. Rates vary significantly and you won't know who's most competitive without comparing.

Mistake #5: Thinking Short-Term

The average American moves every 7-10 years. Physicians often move more frequently—especially early in career. Residency to fellowship. Fellowship to first attending job. First job to second job. Closer to family once you have kids.

Yet I constantly see physicians buying homes like they'll live there forever.

A surgeon I worked with bought a beautiful $1.1 million home during his first attending job. He spent $80,000 customizing it—a built-in home gym, custom wine cellar, specialty landscaping. He was building his "forever home."

Two years later, he got recruited to a prestigious academic position across the country. The opportunity was too good to pass up.

He sold the home for $1.05 million (slight market dip). After real estate commissions, closing costs, and the customizations that added no resale value, he lost about $130,000 on a house he owned for two years.

The math on short-term ownership:

When you buy a house and sell it within 2-3 years, you're often losing money even if the price goes up. Here's why:

• Buying closing costs: 2-3% of purchase price
• Selling closing costs: 8-10% of sale price (including agent commissions)
• First few years of mortgage payments: Mostly interest, little equity building
• Moving costs: $5,000-$20,000 depending on distance

On a $750,000 home, your transaction costs are roughly:

• Buying: $18,750
• Selling: $60,000
• Moving: $10,000
• Total: $88,750

Your home needs to appreciate nearly $90,000 just to break even. And that doesn't count the interest payments that didn't build equity.

What to do instead:

Be honest about how long you'll likely stay. If there's a real chance you'll move in 2-3 years, consider:

1. Renting instead: Yes, you're "throwing money away" on rent. But you'd throw more away on transaction costs if you buy and sell quickly.

2. Buying less: A smaller, less customized home is easier to sell and less costly to move from.

3. Avoiding customization: Standard finishes sell better than quirky personal touches. Save the custom wine cellar for your forever home.

4. Considering investment value: Buy in areas with strong rental markets so you could rent the property out if you need to leave.

Bonus Mistake: Not Getting the Right Insurance

This isn't one of the "big five" but it causes problems often enough that I want to mention it.

New homeowners frequently get the cheapest homeowner's insurance they can find. They figure insurance is insurance.

Then something happens—a pipe bursts, a tree falls on the roof, a kitchen fire—and they discover their policy has:

• High deductibles they can't afford
• Coverage gaps for common issues
• Replacement cost coverage that's below actual replacement cost
• No coverage for expensive items (jewelry, art, medical equipment stored at home)

What to do instead:

Get an insurance policy that covers full replacement cost (not actual cash value). Make sure your liability coverage is at least $500,000. Consider an umbrella policy for additional liability protection—physicians are lawsuit targets.

Review your policy annually as home values change. The policy you bought on a $600,000 home might not adequately cover a home now worth $750,000.

The Right Approach to Your First Home

After seeing hundreds of physicians buy their first homes, here's what I've learned works:

1. Buy conservatively at first. You can always upgrade later. It's much harder to downgrade.

2. Budget for total cost, not payment. Your housing expense is much more than your mortgage.

3. Learn your market before buying. Especially if you're moving to a new city.

4. Get properly pre-approved. Not pre-qualified. Pre-approved with full documentation.

5. Think about your timeline. Don't buy your forever home until you're actually ready to stay forever.

6. Take your time. After years of delayed gratification in training, it's tempting to rush into homeownership. Resist. A few extra months of patience won't matter in 30 years. Making a thoughtful decision will.

Your first home doesn't have to be your dream home. It just has to be a smart financial decision that gives you stability and starts building equity.

Save the 6,000 square foot custom build for when you're established, your income is predictable, and you know where you want to spend the next 20 years.

Get Pre-Approved for Your First Home →

Tanner Cook | NMLS# 2090424 | Cook Brothers Mortgage Team

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Disclosure: This content is for educational purposes and does not constitute financial advice. Individual circumstances vary. Consult with qualified professionals before making major financial decisions.