Back in the day, we only had a conforming loan limit (currently $417k), and any loan amount above that was considered Jumbo. Now we have three levels of loan limits and down payment requirements for Conventional loans. (FHA will allow 3.5% down payment up to a $625,500 loan amount, but we will not be reviewing this loan type).

• Conforming loan amount (up to $417k loan): minimum required down payment is 5%
• High-balance/Super-Conforming loan amount ($417,001-$625,500): minimum required down payment is 10%
• Jumbo loan amount (any amount above $625,500): minimum required down payment is 20%*

However, the good news is that there is now a lender that will do an 80/10/10 up to certain limitations.  This means: Up to an 80% financed 1^st mortgage, 10% financed 2^nd mortgage with 10% down payment.  This is how we used to structure nearly all loans prior to the credit crunch in order to avoid having you pay Mortgage Insurance.  There are limitations to this loan structure though, so we will take a look at that along with some current numbers.

Requirements to this loan structure:

• 1^st mortgage loan amount cannot exceed $625,500
• Minimum middle FICO score requirement is 720 or greater
• 2^nd mortgage cannot exceed $500k
• Combined liens cannot exceed $1MM
• Choices in your 2^nd mortgage:  (a) Equityline (10 years Interest-Only; 20 years Fully-Amortizing); (b) 15 Year Fixed 2^nd

For the true 80/10/10, since the 1^st mortgage is capped at $625,500, you will be looking at a purchase price of up to $781,875. You would normally have to put down 20% ($156,375) on this price, but this program will allow you to put down just 10% ($78,187). Here’s what the total housing payment will look like:

$625,500 1^st mortgage, 30 Year Fixed, 4.625% (APR 4.670%): $3215.94
$78,188 2^nd mortgage, equityline, Prime + 1.0% (currently 4.25%): $276.92
Property Taxes: $814.45
Homeowners Insurance: est. $100
TOTAL: $4407.31

It’s a good option for getting into a home and the housing market right now, if you’re around this price point, but do not have the full 20% down payment. Contact me for more details and to run exact numbers for your scenario, credit score and with current interest rates.