I dont want to pay PMI and I dont have a 20% down payment. Do 80/20 loans still exist?

Asked by Ray Williams, Jacksonville, FL Wed Feb 16, 2011

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Patricia Tenney’s answer
Patricia Ten…, , Lake Havasu City, AZ
Wed Feb 16, 2011
If I were in your shoes I would look at HomePath listings if you are OK with buying a fixer upper you can get more bang for your buck and get a loan with no PMI and no appraisal for a HomePath Mortgage. You can get in with 3% down, would get a better rate with 5% down but either of these would be without PMI. If you would like to see some comparisons, I'll be happy to help with that.
1 vote
, ,
Wed Feb 16, 2011
They do not.

This is my best suggestion. Put less than 20% down and ask your lender to give you a "Single-Paid Mortgage Insurance Premium". This is a form of PMI that requires one large payment at closing, but it's not included in your monthly payment. It ranges from 1-2.25% of your loan amount usually, which is a large amount but a low cost to have no PMI on your monthly payment (not to mention that you don't have to deal with the horrible process to get it removed from your payment).

This will mean you'll have to come up with more money at closing to cover this cost. If you were planning on putting 10% down, you would likely put 7/8% down and pay the fee.

Remember that PMI is tax deductible through 2012 if your income is under $109k, so paying it all upfront during a tax year that it's deductible may give you the same tax benefit as an 80/20 loan with a lower payment. Talk to your tax advisor for advice on this.
1 vote
Marvia Thomp…, , Duval, Jacksonville, FL
Fri Feb 18, 2011
All great answers... two things with the H2H and other grant/bond money loans are that sometimes they run out of money (USDA) which could mean you have to postpone your closing until they are re-funded. Secondly a lot of the programs require you to pay a portion of the money back if you don't stay in the house for a certain period of time. So, just make sure you understand all the rules before you decide which program works best for you.

It is best to work with a local realtor who understands all your options. Some lenders only do USDA or H2H, few do all the programs. So finding a Realtor who can help you find a lender that finances according to your needs is the easiest way for most buyers. Most Realtors know which lenders do what kind of financing and which homes will qualify for which kind of financing. When you are using government money (bond/grant money) you and the home must qualify. Of course that is true with FHA and VA loans also.
0 votes
Blaine Rabe, Agent, Jacksonville, FL
Thu Feb 17, 2011
Good Day,

You will have to check out the SHIP programs, the H2H programs, and Florida Bond Money. They are all first time buyers gov projects that give you thousands of dollars for the down payment, etc. Also the Fannie Mae Homepath properties with 3% down, but just on some homes.

There is more.

Lots of options. Get a local real estate agent and have at it.

Regards,
Blaine Rabe
REMAX
904-874-0814
0 votes
BG, Home Buyer, Phoenix, AZ
Wed Feb 16, 2011
Homepath is pretty close to zero down.
0 votes
Matt Berrang…, Agent, Jacksonville, FL
Wed Feb 16, 2011
Hello Ray,
Your best bet would be to see if you can qualify for the USDA Rural Development loan. This loan is 100% financing without any PMI (yes you read that correctly). But this loan is only available in rural areas which would eliminate Duval County from the list. But Clay County, St Johns, Nassau, and other surrounding counties have areas that qualify for this type of loan. I can help you find a great home- so just let me know what you are looking for. Matt Berrang, INI Realty 904-333-6363
Web Reference:  http://www.jaxbuyer.com
0 votes
Carl Henker, , 95928
Wed Feb 16, 2011
80/20 loans have been gone for some time. You can save up until you have the 20% and buy when prices and rates have increased or you can pay the PMI and buy now while rates are at a 50 year low and prices have returned to 2004 levels. If you buy using PMI you may have it removed in as early as two years if values have increased or you have paid down sufficient principle. You should check with your tax advisor regarding the deductibility of PMI like interest.
0 votes
Carl Henker, , 95928
Wed Feb 16, 2011
80/20 loans have been gone for some time. You can save up until you have the 20% and buy when prices and rates have increased or you can pay the PMI and buy now while rates are at a 50 year low and prices have returned to 2004 levels. If you buy using PMI you may have it removed in as early as two years if values have increased or you have paid down sufficient principle. You should check with your tax advisor regarding the deductibility of PMI like interest.
0 votes
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