Piggy back Loans for a 20 percent down payment

Multi-Family and Apartment Investing
4yFollow

Piggy back Loans for a 20 percent down payment

Tanner Kenneth Jenkins
Salt Lake City, UT · Member since 2021 · 30 posts · 9 votes

Hey guys, I'm an aspiring investor looking to get a triplex in six months. I have enough for 10 percent down but am wanting to avoid mortgage insurance on an FHA loan. With mortgage insurance the numbers just don't add up. All my analyses are negative for all these properties I am looking at. Who has experience with piggy back loans for their down payment and can walk me through their numbers? Thanks so much. I love this website!

0Reply
21 views

Most Popular Reply

Jeff Shumway
Lender · Tampa, FL · Member since 2020 · 182 posts · 90 votes
4y

The mortgage insurance is 1.75% of the loan amount due at closing. This is rolled into your loan amount, so it's not anything additional due at closing. Below is the chart showing how much in mortgage insurance you will pay, depending on down payment and loan term. 

2Reply
See this reply in the discussion

6 Replies

Jump to latestLatest
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y

    Using a piggy-back loan may remove mortgage insurance, but it will increase your mortgage payment and erase a lot of the "savings" you seek. Not to mention you'll be heavily leveraged, which I don't recommend.

    If mortgage insurance is killing the deal then I don't think the properties you're looking at are good deals. In a hot market, there are a lot of people looking for good deals. When something hits the MLS and it's a good deal, there are investors pouncing on it. You need to find some properties that haven't been listed yet so you can buy at a price point that makes your numbers work with what you've got.

    The DIY Landlord Book4.7248 Reviews
    WebsiteView Page
    1Reply
  • Tanner Kenneth Jenkins
    OP
    Salt Lake City, UT · Member since 2021 · 30 posts · 9 votes
    4y

    I keep getting numbers for mortgage insurance that are completely different. Some PMI Calculators say it's just 175 and others say it'll be more like 475. If I am getting a $600,000 loan with 3.5 percent, what would you say it would be closer too?

    0Reply
  • Parker Brooks
    Contractor · OH · Member since 2021 · 25 posts · 14 votes
    4y
    Originally posted by @Tanner Kenneth Jenkins:

    I keep getting numbers for mortgage insurance that are completely different. Some PMI Calculators say it's just 175 and others say it'll be more like 475. If I am getting a $600,000 loan with 3.5 percent, what would you say it would be closer too?

    600k x .8% = x/12months

    its gonna be ab 400 month id say

    0Reply
  • Jeff Shumway
    Lender · Tampa, FL · Member since 2020 · 182 posts · 90 votes
    4y

    The mortgage insurance is 1.75% of the loan amount due at closing. This is rolled into your loan amount, so it's not anything additional due at closing. Below is the chart showing how much in mortgage insurance you will pay, depending on down payment and loan term. 

    2Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    4y

    @Tanner Kenneth Jenkins since you are using FHA, that means this is owner occupied. I suspect your numbers don't look good because you are only including income from the rental units. You need to deal analyze with rent from your owner occupied unit included. Even though you are not paying rent, you are avoiding rent in the amount of your units fair market value. It is very common for owner occupied with low down payment to not cash flow when you don't include your rent value in the equation.

    0Reply
  • Wes Short
    Real Estate Broker · Indianapolis, IN · Member since 2015 · 112 posts · 64 votes
    4y

    @Tanner Kenneth Jenkins hi tanner in a similar situation and exploring all the options. What’s been really helpful for me is finding a local bank that can help explain all the options

    Know some banks have loan products that are 10% down but not fha so less regulations.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free