80/20 Mortgage - A thing of the past?

Asked by Curtis Russell-Kozik, Atlanta, GA Mon Aug 26, 2013

Due to the upcoming to PMI rules where this insurance will no longer go away, but remain throughout the duration of the loan, would applying for an 80/20 mortgage be a better option than FHA? With all of the changes in real estate, is the 80/20 loan even still an option? Are the pre-approval requirements significantly more stringent than FHA requirements?

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13
lendersnetwo…, Agent, Plano, TX
Fri Nov 1, 2013
FHA is easier to qualify for and requires just 3.5% down. Yes you need to have MIP for the life of the loan, but you can always refinance to a conventional mortgage in 5 years to drop it. This is the option I would explore, but you probably have many options. I would encourage you to go to our site so we can figure out what the best route to take is for you.
1 vote
Curtis Russe…, Home Buyer, Atlanta, GA
Mon Aug 26, 2013
Are the loan requirements extensive? Or comparable to FHA?
1 vote
Sorry, didn't see this question. The requirements for an 80/15/5 loan are:
Min 700 score. Lender in first position must be on board with this structure. Debt to Income (DTI) follows Fannie Mae guidelines. The credit union I believe caps at 40% DTI.
Flag Mon Sep 16, 2013
, ,
Mon Sep 16, 2013
Client asked if the process to an 80/15/5 loan was extensive. It follows Fannie Mae guidelines. The lender in first position must be willing to play ball. DTI max is 40%. Min score is 700. Georgia's Own Credit Union is no longer accepting new lenders (as of 2012). Must be a member of the credit union or join them. I'm sure there are other credit union who play second position in buying a house.

Rates for a 15 year or 30 year are as high as 15%.

Another option is to get a lender paid mortgage insurance loan if you don't qualify with the credit union. Even though the MI is calculated into your payment forever, at least you don't have to look at it on your statement every month...
0 votes
Kaci J. Jack…, , 30331
Mon Aug 26, 2013
Hi Curtis.

Unfortunately, 100% financing programs are limited. They are only available for borrowers and properties that qualify. VA and USDA loans are programs that finance up to 100% of the loan amount.

The alternative is to consider a conventional mortgage and explore options of LPMI, lender paid mortgage insurance. It would be far less expensive in the long run. It may require you to have better credit and pay a little more of a down payment, but the long term benefits far outweigh the work needed up front.

For more information about your specific mortgage situation, you may contact us at:

e: Kaci.Jackson@FCMHomeLoans.com
c: 404.465.1766
o: 678.381.2257
0 votes
Ava Anderson, Agent, Snellville, GA
Mon Aug 26, 2013
The only loan programs that I am aware of that provide 100% financing now are VA Loans and USDA. Other than you can do FHA with 3.5% down or Fannie Mae with 3% down other than you are looking at much higher downpayments with other loan types. What you are describing no longer exist.
0 votes
John Juarez, Agent, Fremont, CA
Mon Aug 26, 2013
Your version of an 80/20 loan is what I call 100% financing. No,100% is not available except in special lending programs ( VA for instance). Lenders are much more risk adverse these days than during the days when the ability to fog a mirror was adequate to qualify a borrower for a mortgage.
0 votes
Jeff Hutchis…, , Chicago, IL
Mon Aug 26, 2013
HI Curtis. Sounds like everyone has answered your question on the 80/20. Different lenders will have varying overlays on fanniemae/freddiemac financing, especially at higher ltv levels. Check with some banks, lenders, brokers at http://www.current-mortgage-rates.net and find the right loan program and lender for your particular scenario. Best of luck.
0 votes
Javier Menes…, Mortgage Broker Or Lender, Melville, NY
Mon Aug 26, 2013
You also have My Community loan programs that is probably the conventional version of FHA.

If my response was helpful, consider clicking BEST ANSWER!

Javier Meneses
Senior Loan Officer
NMLS #23130
STERLING NATIONAL BANK
310 Crossways Park Drive
Woodbury, NY 11797
jmeneses@snb.com
(516) 606-9648 Cell
(516) 740-4478 Office
(516) 918-5383 Fax
0 votes
Javier Menes…, Mortgage Broker Or Lender, Melville, NY
Mon Aug 26, 2013
I do want to say, the requirements on a conventional loan are pretty much the same as FHA. On both, you have to qualify with income, credit and assets. Less flexibility on DTI an assets than FHA. If you're using at least 5% of your own money and will have at least 2 months reserves, you should be ok. You can get MI coverage with as low a 660 credit score for conventional.

If my response was helpful, consider clicking BEST ANSWER!

Javier Meneses
Senior Loan Officer
NMLS #23130
STERLING NATIONAL BANK
310 Crossways Park Drive
Woodbury, NY 11797
jmeneses@snb.com
(516) 606-9648 Cell
(516) 740-4478 Office
(516) 918-5383 Fax
0 votes
Javier Menes…, Mortgage Broker Or Lender, Melville, NY
Mon Aug 26, 2013
Curtis, the 80/20 is a thing of the past. You can however do a conventional loan as oppose to an FHA and avoid having te lifetime MI. The minimum required downpayment for a conventional loan is 5%, slightly higher than FHA's 3.5%.

If you want a second opinion on a conventional pre-approval, feel free to contact me anytime. Goo luck.

If my response was helpful, consider clicking BEST ANSWER!

Javier Meneses
Senior Loan Officer
NMLS #23130
STERLING NATIONAL BANK
310 Crossways Park Drive
Woodbury, NY 11797
jmeneses@snb.com
(516) 606-9648 Cell
(516) 740-4478 Office
(516) 918-5383 Fax
0 votes
, ,
Mon Aug 26, 2013
The 80/20 mortgage has not existed for several years now. Currently, only USDA and VA offer 100% financing. Fannie Mae/Freddie Mac will require at least 5% down for a Conventional mortgage. For very strong borrowers, a 3% Conventional mortgage might be an option.

Only FHA loans have life of loan Mortgage Insurance. With a Conventional mortgage, the MI will automatically be dropped at 78% LTV.

Conventional mortgage and Conventional MI company guidelines are definitely more strict than FHA.

If you are looking to purchase a property, working with a knowledgeable and seasoned loan officer is critical in today's market. Getting Pre-Qualified is the only way for you to find out your mortgage options. To get Pre-Qualified for your purchase, you can submit your request online at http://www.rodneymason.com.

Regards,
Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
rodney.mason@prospectmtg.com
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia with over a decade of mortgage lending experience.

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203(k) Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle® Renovation | VA | USDA | GA Dream | Jumbo Financing.
0 votes
, ,
Mon Aug 26, 2013
Correct. The 80/20 is no longer available. Not so much from the 80 lender but from the 20 lender.
You may still qualify for an 80/15 loan. The 80 typically comes from a bank and the 15 from a credit union. I believe Evolve bank in Alpharetta does the 80 with 15 from Georgia's own credit union. Ask for Heather at the bank. Expect 40 day closing and high rates from the credit union. The 5% difference cones from you.
0 votes
Scott Godzyk, Agent, Manchester, NH
Mon Aug 26, 2013
There are not any 80/20 loans as there were in the past. I have seen this as a leading cause of why people were foreclosed on as well as a leader in people who just walked away because they did not have any of their own money invested in the purchase.
0 votes
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