Should You Jump Onto a Piggyback Florida Home Loan?
Congratulations on finding your dream home! Don’t worry - just because you can’t afford to pay 20% up front on a down payment, there are still options available to those in need of a Florida home loan.
For starters, many lenders will allow smaller down payments - as little as five percent in some cases. With Florida home loans such as this, however, borrowers are usually required to carry private mortgage insurance (PMI), which means you may be required to make an initial premium payment and pay additional monthly fees on top of your regular mortgage payment.
If these extra charges don’t sound appealing, you may consider a second trust loan, also known as a piggyback loan.
A piggyback loan is a combination of two loans that close at the same time to purchase a home. The most common piggyback loan is an 80/10/10:
- 80 percent of the home’s value is financed through a first mortgage.
- The remaining 20 percent is equally divided between a piggyback loan and the down payment.
- Purchase price: $200,000
- First mortgage amount: $160,000 (80%)
- Down payment: $20,000 (10%)
- Piggyback loan amount: $20,000 (10%)