FHA might be the better way to go. Even if you were able to get a second loan, the interest rate is going to be higher than your first mortgage unless the second loan is a HELOC, which has a variable rate and will eventually go up.
With your median FICO, you probably wouldn't qualify for the best available conventional mortgage rates (for the 80% portion of your loan). FHA rates do not vary with score, and you are well above the current minimum score required by most FHA lenders.
FHA loans can have some added costs in the form of a mortgage insurance premium. But in your case, you can avoid the MIP completely with a down payment of 10.01% (which you apparently have) and choosing a mortgage term of 15 years. With your income and the value of the home you wish to buy, a $500,000 loan amortized over 15 years will result in a payment that will fall well below the ~31% maximum front-end DTI for an FHA loan.
Good question, your access to loans is based on where you are.
FHA loans will vary by county, that's here https://entp.hud.gov/idapp/html/hicostlook.cfm Banks available for 2nd mortgages will also vary. Good areas have 80-10s. The hardest hit areas, you will not find a 2nd mortgage easily. Where are you?
If you even want to consider an 80-10, 700 is the minimum to sit at the table. Have you had anyone look at a rescore model or is there anything that you see that could gain 10pts?
While the HELOC rates will go up eventually, but you can mitigate that exposure by paying it down. It looks like you should have free cash flow based on your DTI. That's always a personal decision and the math was in my head, so don't take that as binding advice.
I was/am a similar situation - looking to do either 80/10/10, or heck even 85/15/5 if I could find a lender that would go for it, would like to borrow around 475K.
Not sure where u are located, for me the limit is 417K. Anything over that requires jumbo, and to qualify for that I'll need 720fico min, plus 20% down min.
For me the benefits of a piggybacking would be 1) avoiding PMI 2) only needing 10% or less down.
I'm around 690 median score, so jumbo won't work, and I cant go over FHA 417K. So I will likely be looking to borrow less unless I can find a lender who still does this.....
Pizzadude, if you're doing 90LTV at 475k, I'm guessing roughly 525k on price?
At that price point, the significance of your local market (not the 417k, but market stability) starts to influence what loan programs are available.
I know that we have 5-10% fluctuations simply between county lines with many programs these days. If you are buying over $465k (10% down is still a conforming loan), there is no "standard LTV." It's amazing. We had one where the east/west sides of County Line Rd were a 10% difference.
Hi crichter, yes you are very close to the price, I think it was listed at 530K. In terms of price this house I was looking at - it might sell for 5% less, but probably not more than that given the market. And I am only shopping within a single county at this point.....so 417K is the conforming limit.
Makes sense. This is independent of the $417k limits. I'm in Cook County which is Chicago. Some lenders still had it as a declining market, when that is the case, the LTV or CLTV can be 5% less. Example, 80% max LTV programs turn into 75%. Some Florida, Arizona, and Nevada markets are even worse.
Same deal, on some 2nd mortgage lenders in some markets, they'll reduce the max CLTV by 5%. Same deal on property types, condos for example require 5-10% more down than single families.
700 is a critical level at that price point.