Piggyback loans (80/10/10): how they work vs. paying PMI
Reviewed by the Editorial Team · Updated October 18, 2026 · 9 min read
A piggyback loan is a second mortgage that closes alongside your first, so the first loan stays at 80% of the price and carries no PMI. The classic 80/10/10 pairs an 80% first loan with a 10% second loan and 10% down, trading monthly PMI for a second, higher-rate payment.
Key takeaways
A piggyback loan closes a second loan with your first mortgage, so the first loan stays at 80% of the price and carries no PMI.
In the example, an 80/10/10 on a $400,000 home costs $2,515 a month against $2,589–$2,739 for one loan with PMI.
PMI on the single loan ends in year 10, while the second loan in an 80/10/10 keeps running for its full 20-year term.
Keeping the first loan at or under $832,750 avoids a jumbo loan in most counties, but refinancing later needs the second lender's consent.
Common splits
80/10/10 and 80/15/5
80/10/10 vs. one loan + PMI
$2,515 vs. $2,589–$2,739
PMI on a single loan ends
Year 10 in the example
First loan stays conforming at
$832,750 or less
30-year fixed average7.18%Freddie Mac PMMS · Nov 5, 2026.
A piggyback loan splits one home purchase into two mortgages that close together. The first loan covers 80% of the price, which keeps it free of PMI, and a second mortgage covers part of the down payment you haven't saved.
80/10/10: 80% first loan, 10% second loan, 10% down
80/15/5: 80% first loan, 15% second loan, 5% down
Second loan: a fixed-rate loan or a variable-rate HELOC
Closing: both loans fund the same day as the purchase
What each split looks like in dollars
Common piggyback splits on a $400,000 home
What each split looks like in dollars
Structure
First loan
Second loan
Cash down
80/10/10
$320,000
$40,000
$40,000
80/15/5
$320,000
$60,000
$20,000
One loan with 10% down, for comparison
$360,000
None
$40,000
Both loans close together, and the lenders underwrite you for the combined payment. In an 80/10/10 the combined loan-to-value is 90%, above the 80–85% cap most lenders put on home equity borrowing, which is part of why fewer lenders offer piggybacks.
Staying under the jumbo line
The 2026 conforming limit is $832,750 for a one-unit home in most counties, and up to $1,249,125 in high-cost areas. When one 90% loan would exceed it, an 80/10/10 can keep the first loan under the line and avoid a jumbo loan and its stricter underwriting.
A $1,000,000 purchase with 10% down, financed two ways
Staying under the jumbo line
Structure
First loan
Second loan
First loan vs. $832,750
One loan, 90% financed
$900,000
None
Above the limit: jumbo
80/10/10
$800,000
$100,000
Under the limit: conforming
The cost is the second loan's higher rate on the $100,000 it covers. Compare that with a single jumbo quote, since jumbo pricing varies by lender.
What a piggyback costs vs. paying PMI
Take a $400,000 home with 10% down, with both first loans priced at the Freddie Mac 30-year average of 7.18%. The table compares one $360,000 loan with PMI against an 80/10/10: a $320,000 first loan plus a $40,000, 20-year second loan.
Worked exampleA $400,000 home with 10% down: one loan with PMI vs 80/10/10
What a piggyback costs vs. paying PMI
Structure
Rate
Monthly
One loan, $360,000 + PMI
7.18%
$2,589–$2,739 $2,439 P&I + $150–$300 PMI until year 10
80/10/10: first loan, $320,000
7.18%
$2,168
+ second loan, $40,000 (20-yr)
8.50%
$347
Total, 80/10/10
7.33% blended
$2,515 no PMI
PMI on the single loan endsYear 10automatically at 78% of the original value; the second loan in an 80/10/10 runs its full 20 years
80/10/10 vs one loan with PMI−$224 to −$74per month, depending on your PMI rate — negative means the piggyback costs less
First-loan rate: Freddie Mac PMMS 30-year average 7.18% (Nov 5, 2026). Second loan: prime 7.00% (Fed H.15) + an illustrative 1.5-percentage-point margin, 20-year fixed; many piggybacks use a variable-rate HELOC instead. PMI shown at 0.5%–1.0% a year, inside the typical 0.46%–1.5% range. Price your PMI
The 80/10/10 costs $2,515 a month: $2,168 on the first loan plus $347 on the second. The single loan costs $2,589–$2,739 with PMI, so the piggyback is cheaper while PMI lasts. At 8.50%, the $40,000 second loan lifts the blended rate only to 7.33%.
The comparison changes over time. PMI on the single loan ends automatically in year 10, at 78% of the original value, cutting that payment to $2,439. The 80/10/10 keeps costing $2,515 until the second loan is repaid in year 20, then falls to $2,168.
What decides the winner
The piggyback wins while its second loan's extra interest costs less than PMI would. The example prices PMI at 0.5%–1.0% of the loan a year, inside the typical 0.46%–1.5%, and the second loan at prime plus an illustrative 1.5 percentage points. Get both quotes at your own score.
Costs the monthly payment leaves out
The payment comparison omits costs that sit outside it. Check these four before choosing:
Two sets of closing costs: fees and title charges on both loans
Second-loan fees: some lenders add annual or early-closure charges
Rate resets: a HELOC second moves with prime after closing
Appraisal gap: a low appraisal raises the cash you must bring
When a piggyback loan goes wrong
Piggyback problems mostly come from the second loan and from plans that change after closing. Four risks deserve a second look before you sign:
Rising second-loan rate: a variable-rate HELOC second can climb with prime
Refinance friction: refinancing the first loan needs the second lender's consent
No automatic end: unlike PMI, the second loan runs until you repay it
Thin equity: at 90% combined loan-to-value, a price dip can leave you underwater
The CFPB explains that a second mortgage is paid off second when a home is sold, and that these loans often carry higher interest rates than first mortgages. That ranking is why the second lender charges more on its slice, and why it can refuse to step back behind a new first loan.
Questions to put in writing
Before you sign, ask whether the second loan is fixed or variable, what its lifetime rate cap is, whether the lender will subordinate to a future refinance, and whether it charges an early-closure fee. Then plan to repay the second loan first, since it carries the higher rate.
Piggyback loan vs. one loan with PMI vs. FHA
All three buy a home with less than 20% down. They differ in what extra cost you carry, when it ends and how many loans you manage.
Three ways to buy with less than 20% down
Piggyback loan vs. one loan with PMI vs. FHA
80/10/10 piggyback
One loan with PMI
FHA, 3.5% down
Down payment
10% (5% in an 80/15/5)
10% in this example
3.5% minimum
Mortgage insurance
None; the first loan stays at 80%
PMI of 0.46%–1.5% of the loan a year
1.75% upfront plus 0.55% a year
Number of loans
Two, closed together
One
One
When the extra cost ends
Second loan: when repaid, year 20 in the example
PMI: automatically at 78% of original value, or on request at 80%
Life of the loan under 10% down; 11 years at 10% or more
Rate risk
Second loan may float if it is a HELOC
None on a fixed-rate loan
None on a fixed-rate loan
Fits best
Strong credit and a reason to skip PMI
One loan, with PMI expected to end
Lower scores or thin savings
Which structure costs least depends on your PMI quote and the second loan's rate. The PMI cost reference shows what moves the premium, and the PMI guide covers how it is removed.
Who a piggyback loan fits
A piggyback fits buyers with about 10% down, solid credit and a specific reason to skip PMI or a jumbo loan. It works best when you can repay the second loan early or choose a fixed-rate second.
Credit strong enough to qualify for two loans
Cash for a 10% down payment, or 5% for an 80/15/5
A budget that can absorb a rising HELOC payment
A price that would push a 90% loan into jumbo territory
Skip it if you can reach 20% down soon, expect to refinance within a few years, or can't absorb a rising payment. In those cases one loan is simpler to qualify for, close and refinance.
Piggyback loans: pros and cons
Pros
No PMI on the first loan
Starts with 10% down instead of 20%
Can keep the first loan within conforming limits
Cheaper per month than PMI in the example
Cons
Two payments and two sets of closing costs
Second loan can carry a variable rate
Fewer lenders offer piggybacks
Refinancing the first loan needs the second lender's consent
What piggyback lenders look for
A piggyback means qualifying for two loans, and fewer lenders offer them. The first loan follows conventional rules, starting at a credit score of 620; the second-loan lender sets its own minimum and may ask for more.
Both payments count toward your debt-to-income ratio, and the lender tests combined loan-to-value against the lower of price or appraised value. A low appraisal can shrink the 80% first loan and leave you short on cash.
Requirements at a glance
Credit score of at least 620 for the first loan; the second lender may require more
About 10% down in an 80/10/10, or 5% in an 80/15/5
First loan at or under $832,750 to stay conforming ($1,249,125 in high-cost counties)
Debt-to-income ratio of 45% or lower at many lenders, counting both payments
Appraisal confirming the price and the combined loan-to-value
A lender that offers a second loan alongside the first, or two lenders that coordinate closing
Piggyback financing means taking a second loan at the same time as your first mortgage, so the first loan stays at 80% of the price and carries no PMI. The second loan covers part of the down payment you haven't saved. Both loans close together, and you make two monthly payments.
What does 80/10/10 mean?
It describes how the purchase is financed: an 80% first mortgage, a 10% second loan and a 10% down payment. On a $400,000 home that is a $320,000 first loan, a $40,000 second loan and $40,000 down.
The first loan stays at 80% of the price, so it needs no PMI.
Is a piggyback loan worth it?
It can be. In the example, an 80/10/10 costs $2,515 a month against $2,589–$2,739 for one loan with PMI, so it wins while PMI lasts. PMI ends in year 10, though, and the second loan keeps running.
It pays off mainly when the second loan is fixed-rate or you repay it early.
Piggyback loan or PMI: which is cheaper over time?
It depends on the second loan's rate and how long you hold both loans. In the example the 80/10/10 is cheaper each month until year 10, when PMI ends, then costs more until the second loan is repaid in year 20, after which the payment falls to $2,168. Compare quotes and closing costs for your own case.
Is it hard to get a piggyback loan?
Somewhat harder than a single loan, mostly because fewer lenders offer them. You must also qualify for two loans, and the combined payment counts toward your debt-to-income ratio. Strong credit and stable income help most.
If no lender will package both, one loan with PMI is the usual fallback.
Is it hard to get approved for a second mortgage?
Not if you have equity and solid credit, but lenders check three things: your credit, your debt-to-income ratio with the new payment, and combined loan-to-value, usually capped at 80–85% on an existing home. A piggyback at purchase reaches 90%, so fewer lenders offer it.
Can a piggyback loan help me avoid a jumbo loan?
Yes — if keeping the first loan at or under the $832,750 baseline conforming limit works for your price. On a $1,000,000 home, an 80/10/10 gives an $800,000 first loan, while one 90% loan would be $900,000 and jumbo. High-cost counties allow up to $1,249,125, so check yours first.
Is the second loan in a piggyback fixed or variable?
Either. Some lenders offer a fixed-rate second with a set term, such as 20 years; others use a HELOC, whose rate is usually variable and moves with prime. A fixed second gives a predictable payment, while a HELOC payment can rise. Ask which type the lender offers before you compare quotes.
Can I refinance a piggyback loan later?
Yes, but the second lender must agree to subordinate, staying behind the new first mortgage, and it can decline or charge a fee. Otherwise you pay off the second loan at closing, often by refinancing both into one. If that single loan exceeds 80% of the home's value, PMI returns.
What is an 80/15/5 piggyback loan?
An 80/15/5 uses an 80% first mortgage, a 15% second loan and a 5% down payment. On a $400,000 home that is $320,000, $60,000 and $20,000.
It needs less cash than an 80/10/10, but the larger second loan carries more of the higher rate, and fewer lenders may offer it.
This guide is general information, not a lending decision. Program rules and dollar limits change — verify current figures with a licensed lender and confirm licensing at NMLS Consumer Access. See all loan types.
Nothing matches that. Try “refinance”, “FHA”, “Texas”, “Rocket” or “PMI”.