Two mortgage loans that fund at the same time on the same property.
First/second combination loans (also known as “combo loans”) are mortgage loans that fund at the same time on the same property. The first mortgage is typically at a loan-to-value ratio of 80% or less, and the second mortgage accounts for the loan-to-value portion above the first mortgage's of 80%.
This loan structure allows buyers to avoid mortgage insurance (see JVM Buyer’s Guide) as well as jumbo loan restrictions. For example, a 90% loan-to-value purchase of a $700,000 home can be structured as a $560,000 first mortgage and a $70,000 second mortgage. Because the first mortgage is at 80% loan-to-value, mortgage insurance is not required.