What Is A Combo Loan And How Can We Apply It For A New Home Purchase?
What is a Combo Loan and how we can we apply it for a new home purchase? The Combo Loan program is used to purchase a home at a higher purchase price ($700,000-$940,000) without having to put down the full 20%.
More and more often, clients are looking to purchase a higher priced home, but without the hassle of having to put 20% down, so they start to get creative and look in a different direction.
Most homebuyers are not putting down 20%, reports show. According to the most recent Realtors Confidence Index by the National Association of Realtors, 52% of all noncash buyers put down less than 20% on their home purchase in October of last year, and a whopping 74% of first-time buyers made a down payment of less than 20%, via CNN.
To help accommodate a growing market and new clientele, we sometimes recommend that the client put down 10% and get the other 10% with a 2nd Lien. This will allow the clients to still be able to purchase the home they want, but still limiting the down payment requirements. This can also work in the clients favor to get a Conventional Interest Rate on the 1st lien instead of Jumbo Rates on the full loan.
The goal in this scenario would be to pay off the 2nd lien as soon as you are able too so then you only have 1 lien at a lower rate. This strategy helps clients in a variety of ways, but is mostly beneficial because it allows the client to put down a smaller down payment, while still being able to purchase these higher valued homes. This opens up an entirely new window for homebuyers, as they are no longer limited to houses within a certain price range.
If you have questions about putting down less than the traditional 20% down payment on homes, contact the Blink Lending team ASAP. We have a number of options and will walk you through each of your options to see which one is best. Whether it’s your first home or your 14th home, our Houston team is here to help you along the way.
Read more from CNN about putting 20% down on a new home.
