1. 80% first trust deed with a 20% second trust deed.
With this plan, you are avoiding mortgage insurance which can add to your monthly payment and also add to the initial loan amount.
2. 100% first trust deed.
This type of loan is good for those who want to make one single payment each month. This loan however, does include a mortgage insurance premium. The amount of your monthly payment will be increased for the mortgage insurance premium due monthly. This premium insures the loan amount for the lender. Once the loan is paid down to 80% of the value of the property you have purchased, you can request to have the mortgage insurance removed from your loan and payments.
3. 80% first trust deed, 10% second trust deed and 10% carry back from the seller is another option.
This combination of loans can be variable. It can also be 15% second and 5% carried back by the seller.
This loan amount however, cannot exceed $362,790 for a single family residence and $464,449 for a two-family residence. These loan amounts are for Riverside and San Bernardino Counties only, Southern California. FHA gives different loan amount options for different counties and states. A new FHA loan can go as high as 103% of the purchase price, not to exceed $362,790, which can include some of the buyers closing costs. In the event your purchase price exceeds $362,790, the buyer will need down payment funds to cover the difference. This loan also includes mortgage insurance payments.
The above descriptions show you how to purchase a home with no down payment.
Now, let’s show you how each one works:
a. 80% 1st with a 20% 2nd trust deed.
The interest rate on the first trust deed is normally based on a special interest rate because the borrower is acquiring 100%
The interest rate on a single first trust deed will be higher due to the fact that the borrower is obtaining a single loan amount to cover the entire cost of the home. This loan will contain a monthly payment for mortgage insurance along with the normal monthly payment. The mortgage insurance payment is a portion of a percentage based on the loan amount obtained. Typically, to get a single loan to
c. 80% 1st trust deed, 10% 2nd trust deed and 10% carried back by the seller
This is considered an 80/10/10. Again, the borrower is
d. FHA loans. Information based on properties purchased in Riverside and San Bernardino counties.
FHA loans are given through many lenders and the rules for a new FHA loan are slightly different. FICO scores are not used in the same way. FHA is not as concerned with FICO scores. An FHA loan is easier to obtain, but the loan amounts are considerably less than a typical conventional loan. The conforming loan amount for a conventional loan is $417,000 for a single family residence and the maximum loan for FHA is $362,790 for a single family residence. With a new FHA loan the initial mortgage insurance premium is added to the amount of the loan. Then there will be mortgage insurance payments due monthly for a term of 5 years and when the loan amount is at 80% of the value of the property purchased.
The conventional loans as described above also have options for monthly payments. A borrower can get interest only payments and 40 and 50 year amortizations, just to name a couple of options available.