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What is better, going with an 80/20 combo loan or going with a 30 year fixed 1 loan? There are many factors that will determine which is the better option. Rates, PMI, loan terms and many other factors will help to determine which is the better option.

Combo loans are increasingly becoming a favorite loan program for first time home buyers and home buyers who do not have enough money to come up with a down payment. These types of combo loans are commonly referred to as 80/20 loans and 100% financing combo loans.

One thing to consider with 80/20 combo loans is that there will be 2 sets of closing costs, since each is treated as separate transaction. You mortgage professional should be able to give you a blended rate to know what your interest rate is for the entire loan amount. Also, you will paying 2 lenders per month.

The first thing to look at is the monthly payment: which type of program is more affordable? If you can afford to pay down the 20% portion of your loan rather quickly, that option may work for you. The main thing to do obtain a Good faith estimate for both programs in order to compare them.

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