New 80/10/10 program available

Don’t get too excited, 80/10/10 mortgage programs are not coming back to the market for everyone.

An 80/10/10 is mortgage finance strategy where a buyer brings in 10% of their own money for the down payment, gets a traditional 80% 1st mortgage, then secures the additional 10% of down-payment or additional financing from another source.

In the run-up to the housing bubble, every bank in America was offering some version of the 80/10/10 program.  Many banks got even more aggressive and offered 80/15/5′s or 80/19/1′s whereas the borrower only had to come in with 5% (or even 1%) of their own money for the down payment.

Banks were happy to take the risk of financing this additional 2nd mortgage or down payment assistance program because they knew that property value always went up…. oooppps.

When the bubble burst, banks abandoned these programs and had to inform consumers that FHA loans were the only program on the market if you wanted to put less than 20% down.

Unfortunately FHA loan come with pricey mortgage insurance premiums and additional up-front costs when obtaining the loan.

An 80/10/10 program, underwritten responsibly, is a great program.  It’s helps decrease a buyer’s monthly costs, limits the amount of fees a the point of origination, and allows buyers to maximize their purchasing power.

Recently one of the lenders I work with did re-introduce a version of this program for loan amounts up to $1,500,000.  Unfortunately, this lender will only finance the first 80% of the loan amount.  The buyer must secure the other 10% of financing from the seller or a 3rd party entity (such as a hard-money lender).

This program is only available to highly qualified individuals… but it seems like a step in the right direction.

As always, if you need information, please contact me at TrustYourLender@gmail.com