Thank you for your response. We were told that when doing an 80/10/10, the second loan could be an actual HELOC -- perhaps we were told this because at the time we were interested in buying a fixer upper? You've cleared this up for me quite a bit, so thank you.

What we would want is a Home Equity Loan for the 10%, not a HELOC.

What would being a fixer upper have to do with it? You are not being given proceeds of 10%, to make repairs with...You are borrowing 90%, but using 2 different loans to do it, and putting 10% dn.

Most people do those loans to avoid paying PMI, and being able to come up with only 10% dn, instead of 20%.

We are looking to have as small of a mortgage as possible but plan to stay in the house for 30+ years.

The house purchase price is somewhere from $285k - $290k and we can do 15% down plus pay cash for closing costs (est. about $7500 for all of closing). I haven't heard of anyone doing a piggyback loan with 15% down vs 10% but if that's an option we could do that.

Paying for PMI causes our monthly mortgage payments to be higher than we're comfortable with, and we wouldn't have the cash to buy out PMI upfront. Piggyback loans seem to make the mortgage payments about equal to what they would be if we were able to put 20% down and not have PMI (approximately).

You would probably be a candidate for a 80/5/15. You would avoid PMI on the loans (a big savings), but the 2nd mortgage is normally at a higher rate.

Look at some of the Homepath Foreclosures...Owner occupied is 3.5% dn with no PMI.

Otherwise, if you are a 1st time buyer, check out BBVA Compass banks first time buyer program... 3.5% dn, no pmi, and 90 days to first pmt. (They also have a Heroes program for law enforcement, Firefighters and military....same type of terms).

We want to put a minimum of 10% down, preferably 15% in order to get the house we want at a reasonable payment. We're planning to build in a development (don't need a construction loan). We aren't pleased with any of the existing homes in the neighborhoods we like that are lower priced.

"What we would want is a Home Equity Loan for the 10%, not a HELOC."

How can a HEL be taken out on a home that hasn't yet been built? Sounds like someone is playing fast and loose with terminology.

What about an FHA 203(k)?

We've talked with the preferred lender of the development we're interested in and they offer essentially any type of mortgage we could possibly want. They're putting together a few scenarios for us to help us determine the best route to take including an 80/10/10 and 80/5/15. They also offer a 180-day rate lock (for a higher rate of course, currently it would be 4.3ish) since the build takes 6 months.

Our ultimate goal is to have a mortgage payment (incl. insurance, etc) at or under $1,600/mo for a purchase price of $285k...preferably in the $1,550 range but at a rate of 4.25 or higher I doubt that is possible (projecting into June 2016).

Just another update...

We heard back from the first lender and got good news! They gave us all of our options and they are all doable for us, a couple of the options are even in the high $1400 range/low $1500s but the option we like is going to be around $1550 so we will most likely be moving forward on building soon. We're going to shop around with other lenders first just to be sure there isn't something better out there.

Since you are so focused on monthly payment... I just want to make sure you have thought of insurance and property taxes, as well as any other assessments (development fees).

Yes, we've thought of that, thank you. That is all included in our monthly payment except for the HOA fee which is $360/yr.

We did not end up choosing a piggyback mortgage -- we're putting down 15% and buying out PMI instead. We are doing a 271-day rate lock by taking a higher interest rate and we are allowed a one-time float down within 60 days of closing to float down to a lower rate if rates are in our favor. It's longer than a 6-month build so we either had to lock at a higher rate or gamble that rates won't go up before summer. Our current closing date is 6/30/16.