Continuing on in my quest to learn more about financing and mortgage options, I put this together to share information on loan alternatives for families lacking the down payment required for other mortgage types.

The eighty twenty mortgage is actually 2 loans that cover 100% of the total purchase price of a home. It’s a 1st mortgage at eighty percent of the cost and a twenty percent second mortgage rolled into one.

If you happen to be a conforming borrower, setting up your mortgage loan in this manner will save you from having to pay private mortgage insurance (which isn’t that much of a huge cost, but it is an added expense). Private mortgage insurance is usually compulsory when you have less than twenty percent as a downpayment, but with the ‘Zero down 80/20 mortgage’ you avoid it all together.

If you are a sub-prime borrower, this mortgage type will keep your interest rate payable lower than having a 100% loan.
And, you could have the option of your second mortgage (the 20%) set up as a line of credit. This may help as interest rates fluctuate. Lines of credit interest rates are usually much lower than the a regular second mortgage rate.

If you’re just starting out or making your move to the country, this zero down option in a mortgage may be just the ticket you need to finally acquire your dream home.

Alright, so you’ve decided it’s time to pack up your family and head for the hills.

A nice rambling country farmhouse will do nicely you figure.

More space, lower crime rate, and a chance to learn to live off the land (at least during the summer months).
But what can you do if you don’t have a lot of cash on hand and you know nothing about rural housing markets or for that matter, mortgage terms?

Start with something you know, a banker or real estate agent you trust to give you sound advice and information without trying to make money off you or sign you up to some new program. Ask a lot of questions and try to get a rough estimate on the amount of money you have to come up with or commit to as a down payment for that country farm house you’re after. Ask about conventional mortgages and the current housing market.

And don’t be discouraged! This is your dream after all…

There are options to conventional mortgages if you just can’t swing a second mortgage or a higher cost of living to get that larger home you wanted. Check into FHA or VA mortgages to resolve ‘too high’ down payment issues - with lesser closing costs and longer amortization periods, FHA mortgages may be the best option for you.