Combination Loan

A combination loan is made up of two independent mortgage loans made to the same borrower by the same lender. One sort of combination loan funds the construction of a new home, followed by a standard mortgage once the construction is finished. Another sort of combination loan offers two loans at the same time for the purchase of an existing home. It's frequently used when a buyer can't afford a 20% down payment but wants to avoid paying for private mortgage insurance (PMI).