What are the 80/10/10, 80/15/5 and 80/20/0 loan plans like, the so-called piggybacks?


The 80/10/10, 80/15/5 and 80/20/0 loan plans are indeed piggybacks because of their structure. People who cannot put down large down payment use piggybacks to obtain better loans and avoid paying mortgage insurance required in their circumstances. The 80 stands for percent of home value, funded with a first mortgage. The second numbers 10,15 and 20 stand for the amount funded by a second lender - it can be a second mortgage loan, or a HELOC. The last numbers, respectively10, 5 and 0 stand for the down payment.

So, 80/10/10 and 80/15/5 will be loans with 10 and 5 percent down payment, while 80/20/0, also known as 80/20, will be a loan where no down payment is made. These loans are sometimes obtained in order to qualify for a better house than one would usually qualify for with a conventional loan and a down payment of less than 20 percent.

However, often the 80/10/10, 80/15/5 and 80/20/0 loans have a substantial balloon payment required at the term of the agreement and since those piggybacks are two loans on the same property, getting another mortgage or equity line may be very difficult.

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