Concurrent Closing with HELOC to fund partial downpayment?

[Elizabeth Chang]

Hi all! 

I am based in NYC and looking to purchase a primary residence Condo in Manhattan. Has anyone successfully done a purchase with 20% down, 80% financing where the buyer only puts down 10% cash, the other 10% is funded by HELOC of the same subject property at closing? Esentially buyer will close the first mortgage at closing then simultaneously applying for a HELOC. I have heard about this financing method from a few people, but want to reach out to the BP community and the financing experts out there! Does this method work for both Condo & Coop in NYC? Thank you!

[Jason Lee]

This is an 80-10-10/piggyback loan and works as you described except you're opening the first and second/HELOC simultaneously. This allows you to avoid PMI as well. It won't work for co-ops unless they allow 90% financing which most don't. The bigger issue you'll have is that many sellers won't be thrilled with a 90LTV offer. Depending on what price point you're looking the market is heating up and 90% is not going to be that attractive.