30/70 Rule? - Posted by gus

Posted by Brent_IL on September 22, 2003 at 01:14:42:

Hi JT,

A reference from an econ class attended 30+ years ago popped into my head. The guy’s name was Alfredo Pareto. He was an economist in the late 1800’s. His thing was the critical few v. the trivial many. I couldn’t remember his last name until I read your post. Thanks.

30/70 Rule? - Posted by gus

Posted by gus on September 21, 2003 at 15:21:23:

I have heard, and read, that banks will loan someone with bad/terrible credit (500-550 beacon) the money to purchase a house if they can come up with a 30% down payment is this true?

That invokes the 80/20 Rule - Posted by JT-IN

Posted by JT-IN on September 21, 2003 at 16:40:24:


80% of Banks/Lenders won’t, which means 20% of them will…

You simply are dealing with the higher risk lenders with credit scores in that range. The equity of 30% does reduce the risk, and therefor some of them will do the deal, based on the reduced risk.

Before you ask for a reference on that 80/20 estimate, I pulled that number out of the closet, when searching for something else that I had misplaced… so it is meaningless, but represents a good guess.