The 80/20 loan means that the homebuyer is obtaining a first mortgage for 80% of the sales price of the home and a second mortgage for the remaining 20% of the sales price of the home, thereby enabling the homebuyer to buy the home with no money down. A homebuyer cannot obtain an FHA loan for this type of transaction because FHA requires that the homebuyer make a minimum cash down payment of at least three percent of the sales price of the home in order to obtain an FHA loan.

FHA will permit a buyer to obtain a second mortgage or other secondary financing for the FHA required three percent down payment only if the secondary financing is from a government agency or government related instrumentality.

You should discuss any second mortgage or secondary financing plans with your mortgage lender to determine if it is in your interest to obtain a second mortgage.