What is an 80-10-10 piggyback loan?

An 80-10-10 piggyback loan uses two mortgages to avoid PMI: a primary mortgage for 80% of the home price, a second mortgage (HELOC) for 10%, and a 10% down payment. Since the primary loan is at 80% LTV, no PMI is required. This structure is popular for buyers who have 10% down but want to avoid PMI costs.

Is an 80-10-10 loan better than paying PMI?

It depends on your PMI rate, the HELOC rate, and how long you keep the loan. If PMI is 0.5–0.8% of the loan, the piggyback structure often saves money within 2–4 years. However, if the HELOC rate is high (8–10%), the piggyback's combined monthly payment may initially be higher than PMI. Run both scenarios and compare cumulative costs at your expected time horizon.

What is the risk of a piggyback HELOC?

The second mortgage in a piggyback structure is typically a variable-rate HELOC. If interest rates rise significantly — as they did in 2022–2023 — your HELOC payment increases. A 2% rate rise can add $100–$200/month to the payment. Ask about fixed-rate second mortgage options (closed-end seconds) if you want to eliminate this risk.

Are both piggyback mortgages tax deductible?

Both the primary and second mortgage interest are potentially tax-deductible if the combined loan amount is under $750,000 (for loans originated after 2017) and the funds are used to buy or improve the home. PMI on a single loan has had uncertain deductibility — Congress must periodically reauthorize it. Consult a tax professional for your specific situation.

Piggyback Loan Calculator

Q: Can I refinance a piggyback loan?

Yes. Once your combined LTV (first + second loan) drops below 80% through home appreciation and principal paydown, you can refinance both loans into a single conventional mortgage with no PMI. This eliminates the variable rate risk of the HELOC and consolidates to one payment. Refinance closing costs are typically 2–3% of the new loan amount.

Calculate 80-10-10 and 80-15-5 structures to avoid PMI. Compare combined payments versus a single loan with PMI, model HELOC rate risk, and plan your refinance exit strategy.

Home Price

Available Down Payment

First Mortgage Rate

Second Mortgage Rate

80-10-10 Combined Payment

$2,598

$2,102 first + $496 second · No PMI

First Loan (80%)

$320,000

Second Loan (10%)

$40,000

vs Single Loan + PMI

+$38/mo

PMI Avoided

$195/mo

Advanced

Structure Comparison & Risk

80-10-10 vs 80-15-5 vs single loan, rate risk, PMI break-even

Compare all structures for a $400,000 home. Monthly payment, total interest paid, and cash needed at closing.

Structure	Monthly Payment	PMI	Total Interest	Cash Needed	Best For
80-10-10 (Piggyback)	$2,598	None	$456,295	$40,000	10% down, avoid PMI
80-15-5 (Piggyback)	$2,854	None	$467,017	$20,000	5% down, avoid PMI
Single Loan + PMI (10% down)	$2,560	$195/mo	$513,610	$40,000	Simple, one payment
Single Loan + PMI (5% down)	$2,702	$206/mo	Higher	$20,000	Minimal down payment

Pro

Long-Term Analysis

5-year cost comparison, tax deductibility, refinance exit strategy

Cumulative cost comparison over 5 years including PMI for the single loan option. Numbers show when each strategy becomes the winner.

Year	80-10-10 Cumulative	Single + PMI (10% down)	Single + PMI (5% down)	Best Option
Year 1	$31,177	$30,719	$32,426	Single 10%
Year 2	$62,355	$61,439	$64,852	Single 10%
Year 3	$93,532	$92,158	$97,278	Single 10%
Year 4	$124,710	$122,877	$129,704	Single 10%
Year 5	$155,887	$153,597	$162,130	Single 10%

How to Use This Piggyback Loan Calculator

This calculator helps buyers with 5–10% down payment decide whether a piggyback loan structure saves money compared to a single loan with PMI:

Quick Calculator

Enter your Home Price, Available Down Payment, First Mortgage Rate, and Second Mortgage (HELOC) Rate. The calculator instantly shows the 80-10-10 combined payment, loan split, and savings versus a single loan with PMI.

Advanced — Structure Comparison Tab

Compare all four options side by side: 80-10-10, 80-15-5, single loan with 10% down + PMI, and single loan with 5% down + PMI. See monthly payment, total interest, cash needed, and which scenario is best for your situation.

Advanced — HELOC Rate Risk Tab

Model what happens if the variable HELOC rate rises by 1%, 2%, or 3%. See the payment impact at each scenario to stress-test the structure.

Advanced — PMI Break-Even Tab

See exactly when PMI drops off the single loan (at 78% LTV) and how total cumulative costs of the piggyback structure compare to the PMI structure month by month.

Pro — 5-Year Total Cost Tab

Cumulative cost comparison at the end of each year for all three structures, including PMI cancellation, to see which option is cheapest at your expected time horizon.

Pro — Tax Deductibility Tab

Compare the deductible interest from both piggyback mortgages versus the uncertain deductibility of PMI on a single loan.

Pro — Refinance Exit Tab

Calculate when your combined LTV reaches 80% through paydown and appreciation — the optimal time to refinance both piggyback loans into a single conventional mortgage.

How Piggyback Loans Are Structured

80-10-10 Structure:
First Loan = Home Price × 80%
Second Loan (HELOC) = Home Price × 10%
Down Payment = Home Price × 10%

Combined Monthly = Payment(First Loan, Rate1) + Payment(Second Loan, Rate2, 10yr)

PMI Savings = Loan Amount × Annual PMI Rate / 12

Break-Even Month: Month when Cumulative(Piggyback) < Cumulative(Single + PMI)

The piggyback structure exploits the PMI threshold: lenders require PMI only when LTV exceeds 80%. By keeping the first loan at exactly 80% and financing the remaining 10–15% through a second mortgage, the buyer avoids PMI entirely. The tradeoff is a higher combined payment (because HELOC rates are typically higher than PMI costs) and variable rate risk on the HELOC portion.

Example: 80-10-10 vs Single Loan with PMI

Michael buys a $400,000 home with $40,000 down (10%)

80-10-10 Piggyback
First Loan ($320,000 at 6.875%)	$2,102/mo
Second Loan/HELOC ($40,000 at 8.5%)	$495/mo
Combined Monthly	$2,597/mo
PMI Cost	$0
Single Loan + PMI (10% down)
Loan ($360,000 at 6.875%)	$2,365/mo
PMI (0.65%)	$195/mo
Combined Monthly	$2,560/mo
PMI removed at year 8.5	$0 thereafter

In this example, the single loan + PMI is actually $37/month cheaper initially. However, Michael's HELOC gets paid off in 10 years, after which his combined payment drops to just the first mortgage. The piggyback structure also eliminates variable PMI deductibility uncertainty. The right choice depends on HELOC rate changes and how long Michael stays in the home.

Frequently Asked Questions

An 80-10-10 piggyback loan uses two mortgages simultaneously to avoid PMI. The primary mortgage covers 80% of the home price (keeping LTV at exactly 80%, the PMI threshold), a second mortgage — typically a HELOC — covers another 10%, and you provide a 10% cash down payment. Since the first loan is at 80% LTV, PMI is not required. An 80-15-5 variation works similarly with only 5% down.

It depends on your PMI rate, HELOC rate, and time horizon. If your PMI rate is high (0.8–1.5%) and the HELOC rate is reasonable (7–8%), the piggyback structure typically wins within 2–3 years. If PMI is low (0.3–0.5%) and the HELOC rate is high (9–10%), PMI may be cheaper. Use the Break-Even tab in this calculator to find the crossover point for your specific numbers.

The second mortgage in a piggyback is typically a variable-rate HELOC tied to the prime rate. If the Federal Reserve raises rates, your HELOC payment rises. A 2% rate increase on a $40,000 HELOC adds roughly $67/month to your payment. To eliminate this risk, ask your lender about a fixed-rate "closed-end second mortgage" instead of a HELOC — the rate will be slightly higher but stable for the life of the loan.

Yes, and this is a common exit strategy. Once your combined LTV (first + second loan balance relative to home value) falls below 80% — through principal paydown and home appreciation — you can refinance both loans into a single conventional mortgage with no PMI. This eliminates the HELOC's variable rate risk and simplifies your payments. Plan for refinancing costs of 2–3% of the new loan amount.

Both the first and second mortgage interest are generally deductible if you itemize, the combined loan is under $750,000, and the funds were used to buy or substantially improve the home. PMI on a single loan has had historically uncertain deductibility — Congress must periodically reauthorize it and it phases out at higher income levels. Always consult a tax professional for advice specific to your situation.