If you earn more than $30,000 per year and do not own a home, you are
paying too much in federal, state, and social security taxes. The
irony is that because you pay so much in taxes, it's difficult to save
for a downpayment, and therefore almost impossible to buy a home. It's
a vicious cycle - the more you make, the more you pay in taxes, and the
harder it is to save for a downpayment. It's like being on a treadmill.
You keep running faster and faster, but you never seem to get anywhere.
The Downpayment Finance ProgramSM is designed to get you off
of this treadmill, and provide you with the tax writeoffs you need now!
The following example compares the tax benefits of financing a home under
the 80/20 Downpayment Finance Program to a 95% First Mortgage based on
a $200,000 sales price.
After Tax Cost of Ownership
After-Tax Cost Analysis:
| 80/20 | 95% | |
| Sales Price | $200,000 | $200,000 |
| 1st Mortgage at 80% / at 95% | 160,000 | 190,000 |
| Downpayment 2nd Mortgage @ 20% | 40,000 | N/A |
| Monthly P&I Payment on 1st Mortgage at 8.25% for 30 years / at 7.5% for 30 years | 1,202 | 1,329 |
| Monthly P&I Payment on 2nd Mortgage @ 11.99% for 25 years | 421 | N/A |
| Property Taxes @ 1.25% of Sales Price | 208 | 208 |
| Insurance | 50 | 50 |
| Mortgage Insurance Premium at .78% | N/A | 124 |
| Total PITI Payment | $1,881 | $1,711 |
| Annual Interest Payment on 1st Mortgage | $13,200 | $14,250 |
| Annual Interest Payment on 2nd Mortgage | 4,796 | N/A |
| Annual Property Taxes | 2,500 | 2,500 |
| Total Deductible Items | $20,496 | $16,750 |
| Annual Tax Savings @ 33% Total Tax Rate (combined State and Federal Tax bracket) | $6,764 | $5,528 |
| Monthly Tax Savings | 564 | 461 |
| Actual Monthly PITI Payment | 1,881 | 1,711 |
| Less Monthly Tax Savings | 564 | 461 |
| Equal Net After-Tax Monthly Payment | $1,317 | $1,250 |
Note: In this $200,000 example, the difference in net after tax payments between the 80/20 program and a 95% loan is only $67 per month. Considering that the 95% loan requires a $10,000 downpayment, at $67 per month savings it would take approximately 12 years to recoup the $10,000 expended. If you used the 80/20 Program and invested the $10,000 elsewhere, it could easily earn more than $67 per month on a compounded basis. Furthermore, the $10,000 would remain liquid. In view of this analysis, the actual benefit of obtaining a 95% loan at a lower interest rate than is available under the 80/20 Program is not as great as it appears on the surface. For those buyers who are attempting to save a 5% downpayment, this is particularly important to keep in mind. The postponement of tax benefits, equity build-up, and appreciation during the period needed to save the 5% downpayment is far more costly than any actual savings which a 95% loan may offer over the 80/20 Program. For this reason, we counsel against taking the time to save, and instead recommend utilizing the 80/20 Program to realize the benefits of home ownership immediately. (Refer to Cost of Waiting section for more information on this subject.)
Qualification Requirements | Property Guidelines | Tax Benefits
Cost Of Waiting | Rent To Ownership Comparison
Prequalification Form | Required Disclosues
Realtor Referral Program | Mortgage Broker Area | Company Profile
Contact Us | Realtor Area | Return Home
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The mortgage financing described herein is available
for properties located in California only.
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