| #ffffff;" /> | | | | Any homebuyer hoping to avoid private mortgage |
| When applying for a mortgage loan, down payments | | | | insurance may qualify for an 80/20 option. Piggyback |
| are generally required as part of the financing. Many | | | | loans are especially beneficial for first time |
| traditional mortgages will only finance 80 percent of the | | | | homebuyers. Young couples will also benefit from |
| home price. Thus, homebuyers are obligated to provide | | | | these loans. Usually, these individuals have not been |
| the additional 20 percent. Having a down payment of | | | | able to build a large cash reserve. This way, they do |
| 20 percent is ideal in a perfect world. In reality, few | | | | not have to put off buying a home. |
| people have access to this type of money. For this | | | | An 80/20 home loan is also offered to individuals with |
| reason, mortgage lenders are offering 80/20, or | | | | poor credit. Mortgage lenders vary in their loan |
| piggyback mortgage loans. | | | | qualification guidelines. Traditional lenders such as |
| How Do 80/20 Home Loans Work? | | | | banks, credit unions, and mortgage companies prefer |
| The concept around 80/20 home loans is very simple. | | | | applicants that have a high credit rating. Thus, they |
| Ordinarily, if a homebuyer did not have a down | | | | may not approve loan requests for credit scores that |
| payment of 20 percent, they would have to purchase | | | | fall below 640. |
| private mortgage insurance, (PMI), to complete the | | | | On the other hand, many lenders offer a range of bad |
| home financing. On average, PMI increases mortgage | | | | credit mortgage loans. These consist of loans that |
| payments by $100. | | | | provide assistance for down payments, closing costs, |
| If accepting an 80/20 home loan, PMI is not required. | | | | low mortgage rates, etc. |
| Instead, homebuyers receive two loans to finance the | | | | Applying for an 80/20 Loan with Bad Credit |
| home purchase. A first mortgage is approved to | | | | Mortgage brokers are very effective with helping bad |
| finance 80 percent of the home cost, whereas a | | | | credit applicants find a fitting home loan program. To |
| second mortgage or home equity loan is approved to | | | | smooth the process, brokers have websites available, |
| finance the remaining 20 percent. | | | | which offer explanations on various bad credit home |
| Who Qualifies for an 80/20 Home Loan? | | | | loans. |