5% Down Loan with No PMI
5% Down, Low Rates, AND No PMI
Avoiding PMI is always a good idea for homebuyers who are not interested in paying for an unnecessary expense in addition to their mortgage payments. While most loans require borrowers to pay for private mortgage insurance (PMI) when they cannot pay 20% down, Hurst Lending & Insurance doesn’t. Instead of charging borrowers a premium for a product that only benefits the lender, Hurst Lending & Insurance created 1%, 3%, and 5% down, No PMI programs. The 5% down, No PMI program is unique because it offers borrowers a way to avoid PMI and avoid higher interest rates while paying only 5% of the home’s value upfront.
Understanding the 5% Down, No PMI Loan Program
We think the best way to understand the 5% Down, No PMI loan program is to look at the reason behind PMI from the lender’s perspective. Despite what you might assume considering the 20% down payment requirement to avoid PMI, the lender isn’t worried about the size of your down-payment. Lenders are just worried about their money at risk. The more a borrower pays upfront in the form of a down payment, the less money a lender has to risk. One of the simplest ways to address Lender’s concerns is by getting a second, or even a third, loan to close the gap between the amount of the down-payment and the Lender’s 20% requirement.
With the 5% Down, No PMI Loan program, a home purchase is financed using a:
- 5% down payment
- 80% primary loan
- 15% secondary loan
This type of arrangement is sometimes referred to as “piggybacking” the loans. The second lien eliminates the need for mortgage insurance, and the borrower can typically deduct the interest on both loans from their federal taxes (as always, consult a qualified tax advisor before making tax-related decisions!). This program is offered throughout the United States by Hurst Lending & Insurance.
Don’t Settle for Less. Talk to an Expert About a 5% Down, No PMI Loan.
In short, if you are ready to own your own home, but don’t have 20% saved for a down-payment, don’t give up just because you don’t want to pay PMI. You don’t have settle on a home you don’t love or pass on the home you’ve fallen in love with. Piggyback loans enable you to buy a home with only a 1%, 3%, or 5% down payment while avoiding mortgage insurance. In the case of the 5% Down, No PMI loan program, the loans also have similar interest rates to conventional 20% down loan programs.