80-10-10 Loan

2 Replies

Could someone explain how working a 80/10/10 loan works please? I don't qualify for a conventional loan, but I do for an FHA loan and there's a house I'm considering that qualifies for an FHA, but I'm recalcitrant considering that I'd be paying the FHA insurance (that never goes away). However my realtor said that the lender can structure something using an 80/10/10 that avoids FHA. What are the pros and cons of a finance structure like this?

80/10/10 is 80% conventional/10% second mortgage (often seller financing) and 10% down.

FHA won't go this route, depends on the lender, as they will do 90% with a lower MIP (PMI is on conventional loans) rate, but a conventional lender might do a Fannie Mae loan for example and carry a second, if you are a good strong customer, this was common with Jumbo loans keeping the 1st at conforming loan amounts.

If your Realtor knows of a lender doing these you can inquire, certainly, but I'd think they would be rare to obtain now, the risk is higher (seconds will be at a higher rate = higher payment) and there are better options for the lender. :)

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