Section contents:
Think 80-10-10 When Buying Your First Home or Moving Up
The 80-10-10 real estate loan is for a buyer who has between
10 and 19 percent of the home’s price to use as a down payment.
Normally, when lending more than 80% of a home’s value, the lender
requires that a borrower purchase private mortgage insurance (PMI) and
maintain that insurance until the borrower has at least 20% equity in the
home.
With the 80-10-10 plan, a Credit Union member can borrow up to 10% of the
home’s value on a Home Equity Line of Credit (HELOC). The member adds
the HELOC funds to the down payment money they already have, puts 20% down
and takes a conventional mortgage/first trust deed loan to cover 80% of
the home’s cost.
One major advantage to this type of program is that the interest on a HELOC is
usually tax-deductible (ask your tax advisor) while the premiums on PMI
are not always deductible.
While this type of loan program is often a major advantage to first-time buyers,
a family moving up into a new and better home might also benefit from the
80-10-10 plan.
Remember that even if you don’t plan to move for decades, you may be able to help
a member of your family by sponsoring them for membership at Northrop Grumman
Federal Credit Union so they can gain the advantage of a home loan here, along with
our other financial services. Click
here for more about sponsoring your family member.
Back to
Home Loan Page
|