High Loan-To-Value Mortgages On Today’s Market

Mortgages with Loan-To-Value (LTV) higher than 80% are considered high LTV mortgages. Most lenders generally require mortgage insurance when LTV is over 80% due to a higher risk. Private Mortgage Insurance (PMI) is provided by a private mortgage insurance companies which protect lenders against loss if a borrower defaults. Recently PMI became tax deductible.

There are few ways PMI is paid:
1)  Borrowers will pay mortgage insurance premium in addition to a regular payment (principal, interest, real estate tax, hazard and flood insurance if required).
2)  LPMI – lenders will pay borrower’s mortgage insurance for them.  With LPMI, the lender pays a borrower’s mortgage insurance by rolling the cost into the interest rate or by adjusting the fee. It means your rate on the mortgage will increase from 0.375% to 0.675%.
3)  Lenders do not require a mortgage insurance premium. From our knowledge and experience though the lender doesn’t require PMI, they will still increase your interest rate. 
High LTV loans are still available up to 90-95% for full documentation loans.

Before the financial crisis there was a technique to cover LTV over 80% to obtain a second mortgage or a home equity line of credit (HELOC) that cost was less than PMI. These days 2nd mortgages or HELOC for high LTV loans are not longer available due to a high risk.

Unfortunately, on today’s market high LTV programs described above are not available for borrowers who require stated documentation programs(no income verification). For those who need a loan based on stated income, another option exists. There are lenders on the market who will permit 90% CLTV (combined 1st and 2nd LTVs). They will give you the 1st mortgage  up to 60% LTV and allow the seller’s second mortgage  up to 30% LTV with a reasonable interest rate. Many sellers agree to give you a mortgage in order to sell their houses on today’s market.

Read Changes to High LTV Conforming Loans