Does anyone have experience with an 80/10/10 "piggyback" loan (in the context of a house hack is even better)? I just heard about this financing option from a real estate agent and would be interested in hearing about your experiences!
The reason buyers use the 80/10/10 loan is to avoid mortgage insurance. If you have 10% down, then the 1st mortgage is a conventional (Fannie or Freddie loan) at 80%, followed buy a simultaneous HELOC up to 90%. With that set up, you avoid mortgage insurance because the 1st is no more than 80%. This generally results in a lower monthly payment versus a 90% first mortgage with MI.
These types of mortgages are common place, and a good tool to look at when buying a home.
HELOC I thought the other ten percent came from a secondary LOAN
@Dwayne Bartoin Oops, I wasn't keeping tabs on this thread. Sorry it took me so long to respond. A HELOC is a 2nd mortgage lien. You can also use a closed end 2nd mortgage as well, but most borrowers want the advantage of having a line of credit as the 2nd.
So again, here is the structure:
1st Mortgage for 80% with no MI
2nd Mortgage or Heloc up to 90%
Your 10% down payment to make 100%
This structure, allows you to avoid MI, get the best rates and have a line of credit that can be used in the future to draw on if and when needed.
I hope this helps?
One of the "10s" can also come from the Seller, if they're willing to carry back. Some will for a short period. Check if that affects the underwriter's ability to make it work though. Some demand you have 10% "skin in the game".
@Erik W. when you say, "carry back," do you mean seller financing?
@Jacob Seim , correct.