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First time Home Buyer and confused. What is the Difference between an 80/20 and an FHA Loan?

I am a first time Home buyer, and my Loan Officer is confusing me about an 80/20 and an FHA Loan. To anyone familiar with these terms, can somebody clarify it to me what these two types of Loans are? And which would be advantagous on my part. Thank you.

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This entry was posted on Wednesday, March 17th, 2010 at 4:11 pm and is filed under fha home loan. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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2 Responses to “First time Home Buyer and confused. What is the Difference between an 80/20 and an FHA Loan?”

  1. ~Concerned~ says:
    March 17, 2010 at 4:29 pm

    FHA federal housing authority affialiated with hud.
    80/20 is 80 % of the loan is pd by one lender and 20% by the other basically meaning you have 2 loans. Known as piggy back loan, just helps you qualify for more of a home.
    I reckon your loan officer can answer this better if you question for a detailed explaination….depending on the home you get would be which loan I would get.
    But FHA would be a better way as long as rates are excellent. FHA loans your less likely to have to produce a down payment.

    I had to add this to knowing which program is right for you will depend on several factors. Consider how much money you have available for down payment. Make sure you sit down with your lender so that you clearly know your budget before looking for a new home. And when “doing the math” for your own situation, be sure to keep in mind that you’ll likely need to cover expenses like earnest money, mortgage insurance and closing costs for the transaction. On a 80/20. FHA loans your less likely to have to produce a down payment.
    Sorry I got to thinking about it and had to refurbish.

  2. dvd says:
    March 17, 2010 at 4:47 pm

    80/20 basically is an 80% first t.d. and and 20% second t.d. (100% of the buy price). Reason why most go with an 80/20 program is because you wont have to pay monthly mortgage insurance. Monthly mortgage insurance is required on most loans over 80% (i.e. FHA).

    FHA requires a 3% down payment (97% financing) and will have mortgage insurance (insurance that protects the lender in case of you defaulting on your loan) in addition to the requirement of also have your monthly insurance and taxes incorporated into your payment.

    FHA loans basically are for borrowers with no so excellent of a fico, but have an explanation for previous derogatory credit that was a one time occurrence and also has minimal down payment and reserves (most lenders require that borrowers have at least 2 month of mortgage payments (principle, interest, taxes and insurance) as reserve requirement).

    If you have a excellent fico score and dont want to place any money down, I would go for the 80/20 program (if you can prove your monthly income, and it is excellent enough to qualify under the lenders debt vs income ratio you would get a better interest rate).

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