What is 80/20 loan?

A 20-80is actually called an 80/20 in mortgage terms. This is a way of purchasing a home with 100% financing, but avoiding what is called "PMI" or Private Mortgage insurance. You get 2 loans...the 1st one is for 80% of the sales price and the 2nd is for 20% of the sales price, thus, you have to pay nothing down. You only pay for the closing costs or out of pocket expenses. The first loan usually has a better interest rate than the 2nd, but if you have good budgeting, you can sometimes payoff the 2nd before it is due and increase your equity in your home quickly. If your credit is good and the market is on the rise, you can refinance both loans into one loan at a later date.