An 80-10-10 loan is a way to buy a home with 10% down while avoiding private mortgage insurance, or PMI, on the first mortgage.
The structure is straightforward. The first mortgage covers 80% of the purchase price. A second mortgage covers 10%. You bring the final 10% as a down payment. The second mortgage “piggybacks” behind the first mortgage, which is why this setup is also called a piggyback loan.
The CFPB gives the same example: a borrower uses a 10% down payment, an 80% main mortgage and a 10% piggyback second mortgage. The borrower is still financing 90% of the home’s value, but the main mortgage stays at 80%.
That 80% first-mortgage number is the point. The CFPB says PMI is a type of mortgage insurance you might be required to buy if you take out a conventional loan with a down payment of less than 20% of the purchase price.
80-10-10 Piggyback Loan Basics
| Feature |
How It Works |
Borrower Impact |
| First Mortgage |
Covers 80% of the purchase price. |
Keeps the first mortgage at 80% loan-to-value. |
| Second Mortgage |
Covers 10% of the purchase price. |
Adds a second lien and a second monthly payment. |
| Down Payment |
You bring 10% of the purchase price. |
Reduces the cash needed compared with a 20% down payment. |
| PMI |
The first mortgage avoids PMI because it is not above 80% loan-to-value. |
You avoid PMI, but you still pay the cost of the second mortgage. |
| Loan Approval |
Both loans have to be approved. |
The lender reviews the combined payment and total debt load. |
What Is An 80-10-10 Loan?
An 80-10-10 loan is a home purchase structure that uses two mortgages at the same time. The first mortgage is the larger loan. The second mortgage is the smaller loan behind it.
Here is the math on a $400,000 home:
- First mortgage: $320,000
- Second mortgage: $40,000
- Down payment: $40,000
The borrower still buys the home with 10% down. The difference is that the first mortgage covers only 80% of the purchase price, not 90%.
PMI is tied to the first mortgage on a conventional loan. A standard 90% conventional loan usually comes with PMI. An 80-10-10 structure avoids PMI by splitting the financing into two loans.
How A Piggyback Loan Works
A piggyback loan has two liens on the same home. The first mortgage has the first claim on the property. The second mortgage is subordinate, which means it sits behind the first mortgage in lien priority.
Fannie Mae, one of the government-sponsored enterprises that buys mortgages from lenders and sets many conventional loan guidelines, allows subordinate financing when the loan meets its requirements. Fannie Mae says the terms of subordinate financing must be disclosed to the lender, appraiser and mortgage insurer.
Freddie Mac, another government-sponsored enterprise that buys mortgages from lenders and sets many conventional loan guidelines, also allows first-lien mortgages with secondary financing under its rules. Freddie Mac says secondary financing means any financing subordinate in lien priority to the first-lien mortgage.
For the borrower, the practical result is two loans on one property. You make the payment on the first mortgage and the payment on the second mortgage. If the second loan is a HELOC, the payment can change as the rate and balance change.
Why Borrowers Use 80-10-10 Loans
The main reason is PMI avoidance. A borrower with 10% down can use a second mortgage to keep the first mortgage at 80% of the purchase price.
That does not automatically make the piggyback loan cheaper. PMI has a cost, but the second mortgage has one too. The second mortgage often carries a higher interest rate than the first mortgage because it is riskier for the lender. The CFPB says piggyback second mortgages typically carry a higher interest rate and are often adjustable.
The right comparison is not “PMI or no PMI.” It is the full monthly cost of a first mortgage with PMI compared with the full monthly cost of the first mortgage plus the second mortgage.
80-10-10 Loan Example
Assume you are buying a $500,000 home and have $50,000 for the down payment.
| Part Of The Purchase |
Amount |
Share Of Purchase Price |
| First Mortgage |
$400,000 |
80% |
| Second Mortgage |
$50,000 |
10% |
| Down Payment |
$50,000 |
10% |
Without the second mortgage, a 10% down conventional loan would have a $450,000 first mortgage. That first mortgage would be 90% of the purchase price and would typically require PMI.
With the piggyback structure, the first mortgage stays at $400,000. The second mortgage fills the gap between the 10% down payment and the 20% equity position needed to avoid PMI on the first mortgage.
80-10-10 vs. 90% Conventional Loan With PMI
A 90% conventional loan with PMI uses one mortgage. An 80-10-10 loan uses two.
The single-loan option is simpler. You have one mortgage payment, one lender process and one lien to manage. PMI adds cost, but it may be removable later if the loan meets cancellation requirements.
The piggyback option avoids PMI from the start. The tradeoff is the second mortgage. If the second loan has a higher rate or adjustable payment, the monthly cost can rise after closing.
| Option |
Main Benefit |
Main Tradeoff |
| 90% Conventional Loan With PMI |
One mortgage and simpler servicing. |
PMI increases the monthly payment. |
| 80-10-10 Piggyback Loan |
Avoids PMI on the first mortgage. |
Adds a second loan with separate terms. |
A piggyback loan is strongest when the second mortgage payment is lower than the PMI cost and the borrower has a plan to pay the second loan down. It is weaker when the second mortgage has a high adjustable rate or when the borrower is already stretching the monthly budget.
80-10-10 vs. 20% Down
A 20% down payment is cleaner than an 80-10-10 structure. You avoid PMI and avoid taking on a second mortgage.
The obstacle is cash. On a $500,000 home, 20% down is $100,000. An 80-10-10 structure reduces the down payment to $50,000, but it replaces the other $50,000 with a second loan.
That can help a borrower buy sooner, but it also leaves less equity cushion. If home values fall, a borrower with only 10% cash invested has less room to sell or refinance without bringing money to the table.
80-10-10 vs. Jumbo Loan
An 80-10-10 loan can also come up when a buyer is near the conforming loan limit.
For 2026, the FHFA set the baseline conforming loan limit for one-unit properties at $832,750 in most of the U.S. Higher limits apply in certain high-cost areas.
A buyer may use a piggyback structure to keep the first mortgage within the conforming loan limit. For example, if a single first mortgage would exceed the limit, a smaller first mortgage plus a second mortgage could keep the first loan conforming.
This does not make the deal automatically easier. The borrower still has to qualify for both payments, and the second mortgage lender has to accept the combined loan structure.
Types Of Second Mortgages Used In Piggyback Loans
Home Equity Line Of Credit
A HELOC is a common second-lien option in a piggyback loan. It works like a line of credit secured by the home.
The main risk is payment movement. Many HELOCs have variable rates, which means the payment can rise if the rate adjusts. A low starting payment is not the same as a fixed long-term cost.
Closed-End Second Mortgage
A closed-end second mortgage gives you a fixed loan amount upfront. Depending on the lender, it may have a fixed rate and a set repayment term.
This can make the payment easier to budget than a variable-rate HELOC. The tradeoff is less flexibility because it is not a revolving line of credit.
Down Payment Assistance Second Mortgage
Some second liens come from housing finance agencies, nonprofits, employers or local programs. These are not always standard 80-10-10 loans, but they can serve a similar role by adding subordinate financing behind the first mortgage.
Fannie Mae’s Community Seconds program is one example of subordinate financing tied to affordable housing programs. Fannie Mae says it does not purchase the Community Seconds loan itself, but first mortgages originated with this type of subordinate financing can be eligible for purchase when the requirements are met.
Who Might Consider An 80-10-10 Loan?
An 80-10-10 loan can fit a borrower with strong income, strong credit and 10% down who wants to avoid PMI.
It can also fit a buyer who expects to pay down the second mortgage quickly. For example, a borrower expecting a bonus, stock vesting event or proceeds from selling another property may prefer a second mortgage they can reduce soon after closing.
A piggyback loan is not a good fit for every 10% down borrower. If the second mortgage payment pushes the debt-to-income ratio too high, the structure can fail even when the first mortgage looks affordable.
Pros Of 80-10-10 Loans
You Can Avoid PMI
The clearest advantage is avoiding PMI on the first mortgage. The first loan stays at 80% loan-to-value, so the conventional first mortgage is not above the usual PMI threshold.
That does not make the second mortgage free. The borrower avoids PMI, but takes on interest and repayment costs on the second loan.
You Can Buy With Less Cash Than 20% Down
An 80-10-10 structure cuts the cash down payment in half compared with a 20% down payment.
On a $600,000 home, 20% down is $120,000. A 10% down payment is $60,000. The piggyback loan covers the other $60,000 through the second mortgage.
You May Keep The First Mortgage Conforming
For higher-priced homes, the first mortgage amount matters. Keeping the first loan at or below the conforming loan limit can be useful when the alternative is one larger jumbo mortgage.
This is a loan-structure advantage, not a guarantee of approval. The borrower still has to qualify under the first and second mortgage rules.
Cons Of 80-10-10 Loans
You Have Two Loans To Manage
A piggyback loan is more complex than one mortgage. You have two loan payments, two sets of terms and two liens on the home.
That complexity matters after closing. If you refinance or sell later, both liens have to be handled. If the second mortgage has a prepayment penalty or payoff fee, that cost can affect the exit plan.
The Second Mortgage Can Be More Expensive
Second mortgages sit behind the first mortgage. That lien position is riskier for the second lender, so the rate is often higher than the rate on the first mortgage.
If the second mortgage is a variable-rate HELOC, the payment can move after closing. That can turn an affordable first-year payment into a tighter budget later.
You Start With Less Equity Than A 20% Down Buyer
An 80-10-10 borrower has 10% cash equity at closing, not 20%. The other 10% comes from debt.
If home values decline, the borrower has less room to absorb the drop. That can make it harder to refinance, sell or remove the second lien without using additional cash.
How To Compare An 80-10-10 Loan With PMI
Do the comparison with actual numbers. Estimate the monthly payment on a single 90% conventional loan with PMI. Then compare it with the combined payment on the 80% first mortgage and 10% second mortgage.
The second step is total cost. PMI may be removable later, depending on the loan and cancellation rules. The second mortgage does not disappear unless you pay it off.
Also compare risk. A fixed PMI payment on one mortgage may be easier to budget than a variable-rate second mortgage. A second mortgage can make sense when the borrower has a payoff plan. Without that plan, it can become the more expensive path.
How To Qualify For An 80-10-10 Loan
1. Confirm The First Mortgage Rules
Start with the first mortgage. Ask whether the lender allows subordinate financing with the loan program you want.
For conventional loans, subordinate financing has to meet Fannie Mae, Freddie Mac, lender and mortgage insurer requirements. If the second mortgage terms are not acceptable, the first mortgage may not be eligible.
2. Get The Second Mortgage Terms In Writing
Ask for the second mortgage rate, payment structure, repayment term, draw period if it is a HELOC, closing costs and payoff rules.
Do not compare a fixed first mortgage payment with only the starting payment on a variable second mortgage. Ask what the payment could become if the rate increases.
3. Compare The Full Monthly Payment
The lender will consider the combined housing cost, not just the first mortgage. That means principal, interest, taxes, insurance, any homeowners association dues and the second mortgage payment.
A piggyback loan that avoids PMI can still fail affordability if the second payment is too high.
4. Check Your Cash Reserve
An 80-10-10 loan reduces the down payment, but it does not remove the need for cash after closing.
Keep enough money for repairs, moving costs and emergency savings. A second mortgage gives you another required payment, which makes reserves more important.
5. Plan The Exit
Know how you plan to handle the second mortgage. Some borrowers pay it down quickly. Others refinance both loans later. Some keep the second loan for the full repayment period.
The exit plan should be realistic before closing. A second mortgage that only works if rates fall or home values rise is a higher-risk strategy.
When An 80-10-10 Loan Makes Sense
An 80-10-10 loan makes the most sense when the borrower has enough income to carry both payments and enough cash discipline to manage the second mortgage.
It can work well when PMI is expensive compared with the second mortgage payment. It can also help when the buyer expects a clear source of funds to pay down the second lien soon after closing.
For higher-priced purchases, a piggyback loan can keep the first mortgage within the conforming loan limit. That matters most when one larger loan would move the borrower into jumbo financing.
When An 80-10-10 Loan Is Riskier
A piggyback loan is riskier when the borrower is using it to stretch into a payment that is already uncomfortable.
The second mortgage is the warning sign. If the rate is adjustable, the payment can rise. If the borrower has limited savings after closing, that payment can create pressure when repairs, taxes or insurance costs increase.
It is also risky when the borrower has no payoff plan. Avoiding PMI is useful only if the second mortgage does not cost more than the PMI would have cost over the expected time in the home.
Alternatives To An 80-10-10 Loan
Conventional Loan With PMI
A conventional loan with PMI may be simpler than a piggyback loan. You have one mortgage and one lien. The monthly payment includes PMI, but the loan is easier to compare and manage.
20% Down Payment
A 20% down payment avoids PMI without adding a second mortgage. This is the cleanest structure if you have the cash and do not need to preserve it for other priorities.
Low Down Payment Loan Programs
Some borrowers compare piggyback loans with FHA, VA, USDA or low down payment conventional options. These programs work differently and have their own mortgage insurance, guarantee fee or eligibility rules.
The right comparison depends on the borrower, property, location and loan purpose. A low down payment program can be more straightforward than an 80-10-10 structure, even if it includes mortgage insurance or program fees.
Down Payment Assistance
Some buyers use down payment assistance instead of a private piggyback second mortgage. These programs vary by state, county, employer and housing agency.
Down payment assistance can come with income limits, occupancy rules, repayment terms or forgiveness requirements. Read the second-lien documents before assuming the assistance is free money.
The Bottom Line
An 80-10-10 loan lets you buy with 10% down while keeping the first mortgage at 80% loan-to-value. That structure can avoid PMI on a conventional first mortgage.
The tradeoff is the second mortgage. You are replacing mortgage insurance with another loan, often at a higher or adjustable rate.
An 80-10-10 loan works best when the full combined payment is lower than the PMI alternative, the borrower has strong qualifications and there is a clear plan for the second mortgage. If the second payment strains the budget, a single mortgage with PMI may be the safer structure.
Frequently Asked Questions
What Is An 80-10-10 Loan?
An 80-10-10 loan uses an 80% first mortgage, a 10% second mortgage and a 10% down payment to buy a home. The second mortgage piggybacks behind the first mortgage.
Why Do Borrowers Use Piggyback Loans?
The main reason is to avoid PMI on a conventional first mortgage. The first mortgage stays at 80% loan-to-value, while the second mortgage covers part of the financing above that amount.
Does An 80-10-10 Loan Avoid PMI?
Yes, on the first mortgage. The structure keeps the first mortgage at 80% of the purchase price, which avoids the usual PMI requirement on a conventional first mortgage. The borrower still pays the cost of the second mortgage.
Is A Piggyback Loan Better Than PMI?
It depends on the numbers. A piggyback loan is better when the second mortgage costs less than PMI and the borrower can manage the second payment. PMI may be better when it is cheaper, simpler or easier to remove later.
What Is The Second Loan In An 80-10-10 Mortgage?
The second loan is usually a second mortgage or HELOC secured by the same home. It sits behind the first mortgage in lien priority.
Can The Second Mortgage Rate Change?
It can if the second loan has an adjustable rate. Many HELOCs have variable rates, so the payment can increase after closing.
Do You Need 10% Down For An 80-10-10 Loan?
In the standard 80-10-10 structure, yes. The borrower brings 10% down, the first mortgage covers 80% and the second mortgage covers 10%.
Can An 80-10-10 Loan Help Avoid A Jumbo Loan?
It can. A piggyback loan may keep the first mortgage within the conforming loan limit while the second mortgage covers the remaining financing. Approval still depends on lender and investor rules.
Are Piggyback Loans Harder To Qualify For?
They can be harder because the borrower has to qualify for two loans. The lender reviews the combined payment, total debt load and second mortgage terms.
What Is The Biggest Risk Of An 80-10-10 Loan?
The biggest risk is replacing PMI with a second mortgage that becomes more expensive or harder to manage. A variable-rate second mortgage can raise the monthly payment after closing.
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