What does 80/20 mean in mortgage terms?

Question

I SEE PEOPLE TALK ABOUT 80/20 IN MORTGAGE TERMS WHAT DOES IT MEAN? AND HOW DOES IT WORK?

Answer 1

It means loan to value ratio.ie: 100% is the total loan then you have 80% of it is borrowed and 20% is a downpayment.

Answer 2

You don’t need a down payment to buy the investment of a lifetime.
If you have good credit, you can finance the entire purchase price of new home using 80/20 financing option.

This option sets up two loans to finance 100% of your new home’s purchase price:

A first mortgage loan for 80% of the home’s value
A secondary home equity loan or line of credit for the remaining 20%

With the 80/20 option, you may be able to avoid paying private mortgage insurance (PMI), which is usually required on primary loans that exceed 80% of the property’s value. And you can still select from a wide array of financing options for the first mortgage, including fixed-rate and adjustable-rate mortgages.


hope that answers to ur question!!

Answer 3

It's a 0% down payment loan program, whereby you have a 1st mortgage of 80% of the home's value and a 2nd mortgage for 20% of the homes value. Eg,

Value = $100,000
1st loan = $80,000
2nd loan = $20,000

You will also see loans structured as 80/15/05 and 80/10/10. The 80/15/5 refers to a1st loan of 80%, a 2nd loan of 15%, and then 5% down, and the 80/10/10 refers to a 80% 1st loan, a 10% 2nd loan, and 10% down payment.

All three of these loans are structured to avoid paying PMI, however, it's important to note the pendulum has started to swing back towards paying pmi because the rates on 2nd mortgages have gone up considerably, and legislation was just passed to make pmi tax deductible.

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Answer 4

It's actually financing 100% of the purchase price by providing two loans. The first loan is based on 80% of the purchase price, while the second loan is based on 20% of the purchase price. Thus the 80/20 Combo. 80% 1st mortgage / 20% 2nd mortgage.

Answer 5

It's 100% financing broken into 2 loans so you avoid mortgage insurance. 80% first mortgage, 20% second mortgage.

Answer 6

It means that you're doing 100% financing with one loan at 80% loan to value and another loan at 20% loan to value. It's one way to avoid paying PMI.

Regards

Answer 7

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RE :What does 80/20 mean in mortgage terms?
I SEE PEOPLE TALK ABOUT 80/20 IN MORTGAGE TERMS WHAT DOES IT MEAN? AND HOW DOES IT WORK?
Follow 11 answers

Answer 8

20% as down payment, borrow 80%. This way you have equity in your home, which is your down payment. It gives security to the lender that you won't default if market tanks. This is the traditional method to get a loan in buying a home... besides paying all cash.

Answer 9

It refers to the percentage that the borrower puts down (20%), and the percentage borrowed of the total purchase price (80%).

Answer 10

If I am not mistaken, it is 80% of the appraisal value with 20% down payment. So if the appraisal is for $100,000. You could borrow $80,000 with a down payment of $20,000.