Combo loans are available in various increments: 80/20, 75/25, 80/15/5 and 80/10/10. These loans split the financed amount into two individual loans. The first loan is either 75% or 80% of the purchase price while the second loan is the remaining amount of the purchase price with an option to have a down payment of either 5% or 10%.
Down payments decrease the risk for the lender which can lead to better rates for the consumer. This loan is one way to avoid PMI, and still finance over 80% of your home's value. Downsides to this type of loan are the additional closing costs and higher interest rates associated with the second mortgage. Because of ever changing guidelines of this program please contact one of our mortgage professionals for more details.