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Problem: Most Lenders will provide a first mortgage of $332,500 with a Mortgage Insurance payment (which is not tax deductible) of approximately $216 per month.
Solution: 80-15-5 program is two loans for the price of one. Under this same scenario, we would issue a first mortgage of $266,000 with a second mortgage of $49,875 and eliminate the additional cost of Mortgage Insurance. All borrowers have a real aversion to paying mortgage insurance. Justifiably so, as mortgage insurance is costly, involves a second Approval process, and is not tax deductible |
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| Avoiding PMI |
An 80-15-5 Program sometimes called a Combination loan or PiggyBack, is a fixed rate program designed to help Borrower's purchase a home with as little as 5% down while avoiding Mortgage Insurance. Not only does it save you money, it also maximizes your tax benefits. Example: Borrowers wish to purchase a home for $350,000 with a down payment of $17,500.
Another great benefit is after the second is paid off, usually (5-15 years) you are left with only one payment. This can be real helpful if you are planning to retire or take on additional debt in the near future, i.e.., college expenses.
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| 5% Down Payment |
| $0.00 Mortgage Insurance |
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80/15/5 involves a purchase money second
(80% first lien, 15% second lien, 5% down) |
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Program Comparison |
OPTION 1 |
OPTION 2
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95% LTV |
80/15/5 CLTV |
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Sales Price |
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$200,000 |
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$200,000 |
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1st Mortgage |
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$190,000 |
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$160,000 |
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2nd Mortgage |
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N/A |
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$30,000 |
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Monthly Mortgage Insurance |
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$123.50 |
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-0- |
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P:I Payment 1st |
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$1361.18 |
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$1146.26 |
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P:I Payment 2nd |
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N/A |
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$ 317.81 |
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Monthly Payment |
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$1484.68 |
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$1464.07 |
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Balance After 15 yrs. |
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$146,303 |
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$123,203 |
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Payment After 15 yrs. |
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$1361.18 |
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$1146.26 |
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| *Taxes and insurance not included in payment calculations* |
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| Benefits to Borrower |
Enhanced tax benefits, interest on 2nd is 100% tax deductible, mortgage insurance is not.
- Allows for expanded ratios and loosens underwriting.
- Greater equity build-up!
- Saves on closing costs!
- Allows borrowers to manage their own escrows.
- No pre-payment penally on 1st or 2nd lien.
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| Did you know that thousands of dollars can be saved over the course of your loan with just a 1/4 of 1% drop in your interest rate! Get qualified with a Florida Home Loan and a loan officer will give you a free and fast loan analysis. |
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