Which of the following is an example of a secondary loan structure?

The example of a secondary loan structure is characterized by the combination of first and second loans to finance the purchase of a property, often used to avoid private mortgage insurance (PMI) or to manage down payment requirements. The 80/10/10 structure signifies that the buyer secures a primary mortgage covering 80% of the property value, while a secondary loan covers another 10%, and the final 10% is contributed as a down payment.

This structure allows borrowers to take advantage of lower interest rates on the primary loan while still maximizing their purchasing power without exceeding certain loan-to-value ratios typical for lower down payments. By splitting the financing into two loans, borrowers can manage the costs more effectively and achieve more favorable loan terms overall.

In contrast, other structures like 90/5/5, 70/20/10, and 85/15/0 represent different configurations of first and second mortgages. However, the 80/10/10 format specifically identifies a common approach using secondary financing, making it the most applicable example of a secondary loan structure in this context.