Physician Mortgage - 15ARM?

[Samac]

Hiya. 
I'm a 3rd year medical resident, my partner and I are looking at buying a home since we're staying in this town and the rent where I am is nearly doubling from 1066 to 1950 in November. I can't justify that for my old creaky apartment. 
Based on our base income currently, 330,000 is our 3x, we're looking at a max of 350,000. (We do both make more than this with him teaching extra classes and me moonlighting, but since that wasn't always guaranteed I didn't want to include it). 
My mortgage Fico score is >780. My fico 8 is >760. 
I'm looking at physician loan options, putting 5% down. No PMI. 
One offer has been a 15 year ARM/6 mo (30 year total) that today would be 4.75%, I'm looking at buying in the next month and it may go to 5% at max. I'm using 5% in my calculations for worst case scenerio. 

Is this a bad deal? Should I be looking for better interest rates? I can't really find physician mortgage interest rates online since they're so niche. 

[DakotaM]

Your rate looks to be decent, especially keeping in mind that you are only putting 5% down and won't have PMI with it. How long is the rate going to be fixed for? With interest rates rising, once the adjustable rate part goes into effect, your payment will certainly go up some. Though if you are a third-year resident, I'm guessing you only have 2-3 more years of residency left and since you never know where you might end up,the adjustable rate part might not end up mattering that much. 

[Samac]

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@DakotaM wrote:

Your rate looks to be decent, especially keeping in mind that you are only putting 5% down and won't have PMI with it. How long is the rate going to be fixed for? With interest rates rising, once the adjustable rate part goes into effect, your payment will certainly go up some. Though if you are a third-year resident, I'm guessing you only have 2-3 more years of residency left and since you never know where you might end up,the adjustable rate part might not end up mattering that much. 

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It's a 30 year mortgage, 15 year ARM, so I'll have that rate lock for 15 years. I have 2 years left and then I expect my base income to quadruple, though with moonlighting in reality it'll actually be double. 
I'm doing residency close to family and I plan on staying here when it's all said and done. 

[DakotaM]

Oh I misunderstood. Well 15 years at that rates seems pretty good. Never know what the future holds of course, but hopefully rates will cool off and start going down again 15 years from now. You'll have 13 years with an attending salary to decide whether you maybe want to just pay it off early or do something else with with your money. Overall seems like you've got a pretty good setup there. 

[cashorcharge]

It would also seem that within 15 years you could refi to a conventional loan...assuming your equity goes up, keeping you above the 80/20 threshold for PMI so when you convert, you won't get hit with that. Not sure where your at but thinking 15 years is enough to earn that kind of equity. The only downside on the 15 ARM is you won't be paying down principal. 

[ShanetheMortgageMan]

You'd still pay principal on an ARM unless it's an interest only payment.  Even then, you can make principal payments if you choose.

I concur with others that it sounds like a solid offering and odds are you probably won't have this mortgage for longer than 15 years so that part of the loan term shouldn't give you pause.  If it is concerning to you then monitor conventional interest rates and make the jump to a 30-year fixed when timing is right.