Buying Home With No PMI With 80-10-10 Mortgage Loans
This BLOG On Buying Home With No Private Mortgage Insurance With 80-10-10 Mortgage Loans Was UPDATED On January 9th, 2019
Any conventional mortgage loan with less than 20% down payment, or equity in the home, requires mandatory private mortgage insurance.
- However, homebuyers who have at least a 10% down payment towards a home purchase, and want to eliminate paying for private mortgage insurance, also known as PMI can no do so with Buying Home With No PMI With 80-10-10 Mortgages
- I have the perfect solution for homebuyers using Buying Home With No PMI With 80-10-10 Mortgage Loans
- It is called 80-10-10 Mortgages
In this article, we will cover and discuss Buying Home With No PMI With 80-10-10 Mortgage Loans.
The Mechanics 80-10-10 Mortgage Loans
Home Buyers who have at least a 10% down payment and want to avoid paying a monthly private mortgage insurance premium can get a first mortgage of 80% Loan to Value, LTV, and a second mortgage loan or a Home Equity Line of Credit, also known as HELOC, of 10% so the total CLTV is at 90% loan to value, LTV.
- These mortgage loan programs are also known as 80/10/10 where the first mortgage loan is 80%, second mortgage loan or HELOC is 10%, and the down payment towards new home purchase is 10%
Advantages Of 80-10-10 Mortgage Loan Programs
As discussed earlier, private mortgage insurance is mandatory on all conventional mortgage loans with less than 20% down payment on conventional loans:
- Minimum conventional mortgage down payment requirements are mandated by Fannie Mae at 5% down payment with private mortgage insurance
- First time home buyers with higher credit scores can qualify for 3% down payment home purchase conventional loans
- Fannie Mae and/or Freddie Mac defines a first time home buyer as a buyer who had no ownership in a home in the past 3 years
- Private mortgage insurance is similar to FHA mortgage insurance premium
- Home Buyers who have 10% down payment will still be required to pay private mortgage insurance since it is less than 20% down payment
- With entering into 80-10-10 Mortgage Loans, buyers will not have to pay private mortgage insurance due to the fact that first mortgage is at an 80% Loan to Value, LTV
Mortgage Borrowers will need permission from the first mortgage lender and in some cases, this might not be allowed.
Mortgage Loan Limits
Government and Conventional Loans have loan limits.
- If home buyers want to purchase a higher-priced home that exceeds the maximum loan limits in the county the property is located can use 80-10-10 Mortgage Loans instead of going with a Jumbo Mortgage
- Jumbo Loans are more difficult to qualify than traditional government and conventional loans and have higher interest rates
Qualifying For Second Mortgage
Most Piggy Back Lenders Of 80-10-10 Mortgage Loans have their own mortgage guidelines.
- They may have their own waiting period requirements after bankruptcy and/or foreclosure
- The second mortgage lender may have minimum credit score requirements
- Debt To Income Ratio caps on Cumulative Loan To Value (CLTV)
- The second Appraisal may be required
- Second mortgage lenders will have their own guidelines
Home Buyers needing 80-10-10 Mortgage Loans will need to qualify for the first mortgage from the first mortgage lender as well as the second mortgage from the second mortgage lender.
Home Buyers who need to qualify for 80-10-10 Mortgage Loans, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at [email protected] We are available 7 days a week, evenings, weekends, and holidays.