WHAT IS A COMBO LOAN OR AN 80/15/5?
A combo loan is actually two loans that equal the combined loan-to-value of one loan. For instance, an 80/15/5 is an 80% first lien, a 15% second lien and a 5% down payment. The 80/15/5 structure allows for 95% financing without mortgage insurance. When a client chooses to put less than 20% down for a down payment, he or she may choose to split the loan amount into two liens, or he or she may opt to have one 95% lien and pay mortgage insurance. However, mortgage insurance is NOT tax deductible but the interest paid on both loans usually is.
