When considering purchasing a home with less than 20% down payment, the borrower is looking at paying mortgage insurance (Private Mortgage Insurance “PMI” or Mortgage Insurance Premium “MIP”).
This extra out-of-pocket expense is added onto the mortgage note each month until you can drop the mortgage insurance, usually when you reach 20% equity in the home.
Piggyback Mortgage Loan a.k.a 80/10 Loan
When you have 10% down payment ready, but a 20% down payment is just too big of a stretch without months and years of more saving, you may be interested in a piggyback mortgage. A piggyback mortgage combo is also referred to as an 80/10 because
- 80% is a first mortgage,*
- And 10% is a simultaneous second mortgage or HELOC loan.
Your down payment of 10%, plus closing costs are your out of pocket expenses. **
With the HELOC (“home equity line of credit”) acting as the other half of your down payment to reach the full 20%, mortgage insurance is no longer a requirement.
Who Qualifies for a Piggyback Mortgage?
Usually, a borrower has to have a minimum qualifying credit score to be approved for an 80/10 combination mortgage. If you have 10% to put down on a house, and you are interested in purchasing a home, we encourage you to call us to talk about options.
As with any loan, a piggyback loan has pros and cons, and we want you to do your homework and understand those pros and cons. We are here to talk to you about any questions you may have – (985) 867-8867
Why Choose First Castle as Your 80/10 Mortgage Lender?
First Castle FCU is unique in our ability to offer an 80/10 mortgage. Many traditional lenders don’t have this option for borrowers with less than the 20% down payment, but it is a valuable loan combination that works well for many borrowers. And First Castle does not charge an origination fee.
Lastly, at First Castle we offer both the first mortgage and the second mortgage (HELOC). We offer both simultaneously, so you don’t have to have a mortgage at one lender and a HELOC at another. This saves you time and money, and you need your cash to help make your new house your home!
*At 4.32% APR, 360 monthly payments of $49.60 per $10,000 borrowed. Not every borrower will qualify for the best interest rate. APR based on many factors, including the creditworthiness of the borrower. APR = Annual Percentage Rate
** 10% down of the amount financed. Buyer is still responsible for all closing costs. All normal qualifications apply. Not everyone will qualify for this product.