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No Downpayment Loan (100% Financing) -- 80/20 Option

Mortgage Library: Types of Mortgage Loans: No Downpayment Loan -- 80/20 Option

The main advantage of this type of loan, also known as 100% Financing, is the ability to buy a home with almost no money down. If you have a strong credit profile but have limited funds to commit to a downpayment,  then 80/20 mortgage is just right for you.

Lenders typically require a downpayment of at least 20 percent of the purchase price. If the loan amount is for more than 80 percent of the purchase price, private mortgage insurance (or PMI) is usually required. You can avoid paying PMI by getting a second mortgage ('piggyback loan') to back up your first mortgage.

The first mortgage is provided for 80 percent of the cost of the home and the 'piggyback' second mortgage is for the remaining 20 percent. The 80 percent first mortgage can be a fixed-rate (15-year or 30-year), adjustable-rate (usually 5/1, 7/1 or 10/1 fixed period ARM) or interest-only loan. The 20 percent second mortgage can be a home equity line of credit that changes with the prime rate.

Combined, the two loans allow you to purchase 100% of your home with no money down.

Mortgage Professionals Offering 100% Financing

If you are looking for a No Downpayment Loan (80/20 Option) and need more information or advice, we invite you to take advantage of our database of the most competitive lenders available. Just complete a short loan request form and the best lenders in your local area offering 80/20 loan programs will contact you with their rates and fees. Please note that if you'd like to apply for a no downpayment loan, you should have a good credit history.


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