Question:

Should I get 80/20 or 100% financing with lender paid PMI?

Answer:

It depends on your case. 80/20 and a 100% loan with lender paid PMI are commonly quoted to borrowers who are unable to provide any down payment.

Usually, the 80/20 and 100% financing with LPMI will be offered for equal periods of time, with basically the same monthly payments. The piggyback may also have slightly lower closing costs.

If you are going to stay at this house for 4-5 years or longer, the 80/20 loan makes more sense. In the opposite, if you plan to stay for less than 5 years, then 100% financing with lender paid PMI seems to be the better option.

The 100% financing with LPMI is a mortgage product specifically developed to suit borrowers with no cash for the down payment and can come very handy.

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