If you are considering buying a home in King County, Snohomish County, or Pierce County, and the purchase price is above $750,000, and you have less than 20% for a down payment, then the 80/10/10 loan program may be a great option for you.
Today, I am breaking down the 80/10/10 purchase loan program: It’s a purchase program that requires a min of 10% down payment, and then allows for an 80% loan-to-value first mortgage with a 10% (or greater) second mortgage.
It’s important to understand the dynamic surrounding this loan – As I write this blog in February 2018, the max FANNIE MAE loan limits in King, Snohomish, and Pierce County is $667,000. The way we would originate this loan is: an 80% first mortgage is typically maxed out at $667,000, with the remaining financed amount (minus the 10% down payment) being the 2nd mortgage.
Here’s what you need to know about the 80/10/10 loan program in 3-minutes or less.
The 80/10/10 Loan Program for Seattle Homebuyers:
A Brief Summary of the 80/10/10 Loan
(1) 700 credit score is required
(2) A max loan amount of $350,000 allowed w/ 10% down
(3) Owner occupied and 2nd home purchases only (2nd homes require 15% down)
(4) Fees: $295 up front loan fee / annual $75 service fee
(5) Condos and townhomes allowed
(6) No bankruptcy filed in last 7-years
(7) No foreclosure or short sale filed in last 5-years
(8) Interest rate is PRIME (4.5%) plus margin (.99% to 1.99%)
(9) Margin for pricing based on credit score and loan to value
(10) Monthly payment is based on interest only calculation
How This Looks On Paper
(Disclosure: this is not a rate quote, live example only: 2/3/18)
Purchase Price: $1,000,000
Down Payment: 10% ($100,000)
Base Loan Amount on First Mortgage: $667,000 (max county loan limit)
Second Mortgage Amount: $233,000 (1,000,000 – 10% = 900,000)
900,000 – 667,000 (first mortgage) = 233,000
Min. Monthly Payment for 2nd: 233,000 x 6.99% (prime + margin) = 1,357.23/mo.
1st Mortgage Payment: 667,000 @ 4.5% 30-yr fixed = 3,379.60/mo.
Estimated Property Taxes: $750/mo.
Estimated Home Owner’s Insurance: $100/mo.
**TOTAL MONTHLY PAYMENT: $5,586.83/month**
I hope this information helps. Did this help? Please let me know if you have any questions, I am here to help! For more information on how I manage the loan process, pre-approvals, and help serve my clients, see below!
The Perfect Loan Process w/ Dan Keller
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