Loan Types

Piggyback Loans (80/10/10) Explained: Skip PMI With 10% Down?

A piggyback 80/10/10 loan can help you skip PMI or avoid a jumbo loan. Here's how it works, a side-by-side cost comparison and when it backfires.

By Shivam Kaushik · Updated November 5, 2026 · 5 min read

White two-story house with a wraparound porch

Add Keys & Coffee as a preferred source on Google

Quick answers

What it is: a piggyback loan uses two mortgages at once, most often an “80/10/10”: an 80% first mortgage, a 10% second mortgage and a 10% down payment.
Why people use it: to avoid private mortgage insurance (PMI) with less than 20% down, or to keep the first loan under the conforming limit ($832,750 in most areas for 2026) and dodge a jumbo loan.
The trade-off: the second loan usually has a higher rate, and you’ll have two payments and two sets of terms.
When it wins: mainly when PMI would be expensive or you’ll pay off the second loan fast.

Here’s a trick that sounds like a cheat code: put 10% down, never pay PMI. That’s the pitch for the piggyback loan, a classic structure that has quietly come back whenever buyers look for ways to cut costs. It can work beautifully, or it can cost more than the PMI you were trying to avoid. Let’s run the numbers.

How an 80/10/10 piggyback works

Instead of one loan for 90% of the price, you take two:

Piece	Share of price	Typical form
First mortgage	80%	Conventional fixed or ARM
Second mortgage	10%	Home equity loan (fixed) or HELOC (variable)
Down payment	10%	Your cash

Because the first mortgage is only 80% of the home’s value, it doesn’t require PMI. Other versions exist, like 80/15/5 (5% down) or 75/15/10 for condos, depending on what lenders offer.

Piggyback vs one loan with PMI: the math

Let’s compare a $500,000 home with 10% down. We’ll assume the first mortgage is at 7.18% (Freddie Mac’s 30-year average for the week of November 5, 2026), the second loan is at 8.5% over 30 years, and PMI on a single 90% loan costs 0.5% of the loan per year. Your actual PMI and second-loan rates depend on credit and lender.

	Piggyback 80/10/10	Single 90% loan + PMI
First loan payment	$2,710 ($400,000)	$3,048 ($450,000)
Second loan payment	$384 ($50,000)	—
PMI	$0	about $188
Total monthly	about $3,094	about $3,236

Payments computed by Keys & Coffee (principal and interest; taxes and insurance excluded).

In this example the piggyback saves about $142 a month at first. But PMI doesn’t last forever: on a conventional loan it can be removed once you reach enough equity, while the second mortgage keeps charging its higher rate until you pay it off. Read what PMI is and how to get rid of it to compare timelines.

ExampleLena buys the $500,000 home with an 80/10/10 and pays an extra $300 a month toward the $50,000 second loan. She wipes it out in under 9 years and is left with just the first mortgage. Marcus, with the same piggyback, only makes the minimum payment. Over 30 years he pays roughly $88,000 in interest on that $50,000, likely far more than PMI would have cost. Same loan, very different outcomes.

The jumbo-dodging version

Piggybacks are also used on pricier homes to keep the first mortgage at or under the conforming limit. For example, on a $900,000 home with 10% down, an 80% first loan is $720,000, below the 2026 baseline limit of $832,750, so it can be a standard conforming loan. The other 10% goes on a second loan. That can be cheaper or easier than a jumbo loan, but compare both, since jumbo pricing has been competitive at times. See our jumbo loan guide.

Myth buster“Piggyback loans caused the 2008 crash, so they’re dangerous.” Loose lending of all kinds fueled 2008, including 100% financing with no income checks. Today’s piggybacks usually require full documentation, solid credit and real down payments. The structure isn’t the problem; overborrowing is.

Pros and cons

Pros	Cons
No PMI on the first mortgage	Second loan rate is usually higher
Can keep the first loan conforming	Two loans, two payments, two sets of closing costs
A HELOC second can be paid down and reused	A HELOC rate can rise over time
Can lower the initial monthly payment	Harder to refinance later; the second lender may need to agree

Fun factIt’s called a “piggyback” because the second loan literally rides on top of the first one at closing. Both loans are secured by the same house, with the first mortgage in first position.

Who should consider a piggyback?

Buyers with strong credit and 10% down who’d face high PMI costs.
Buyers expecting a bonus, inheritance or home sale soon to pay off the second loan quickly.
Buyers just above the conforming limit who want to avoid a jumbo loan.

If your credit is lower, an FHA loan or a single conventional loan with PMI may be simpler. And if a second loan would make your budget tight, it’s a warning sign. Compare options with the mortgage calculator, the HELOC calculator and the DTI calculator.

HELOC or home equity loan for the second?

The second piece of a piggyback is usually either a fixed-rate home equity loan or a variable-rate HELOC. A fixed loan gives you a steady payment, which is easier to budget. A HELOC often starts with a lower or interest-only payment and lets you repay and redraw, but its rate moves with the market. If you plan to pay the second off quickly with a bonus or sale proceeds, a HELOC’s flexibility can help. If you want certainty, the fixed loan is the calmer choice.

Questions to ask lenders

Is the second loan fixed or variable? What’s the rate, term and any balloon payment?
Are there separate closing costs or appraisal fees for the second loan?
What happens if I refinance the first mortgage later?
What would PMI cost me on a single 90% loan instead? Ask for both quotes side by side.

Then compare each offer’s APR, not just the rate. Our APR vs interest rate guide shows how.

FAQ

What is an 80/10/10 loan?

A first mortgage for 80% of the price, a second mortgage for 10% and a 10% down payment. It’s designed to avoid PMI.

Is a piggyback loan cheaper than PMI?

Sometimes. It depends on the second loan’s rate, how fast you pay it off and how much PMI would cost. Get quotes for both.

Can I refinance a piggyback loan?

Yes, but it can be trickier. You may refinance both loans into one or need the second lender’s agreement to stay in second position.

Do all lenders offer piggyback loans?

No. Many banks and credit unions do, but availability varies. Ask early in your search.

Sources: FHFA 2026 conforming loan limits; Consumer Financial Protection Bureau guides on private mortgage insurance and the Homeowners Protection Act; Freddie Mac PMMS (Nov 5, 2026). Second-loan rate and PMI rate are illustrative assumptions. Payment examples computed by Keys & Coffee. This article is general education, not financial advice. Keys & Coffee is not a lender.

Written by

Shivam Kaushik· IMSHIVA

Founder & Director, QuibbleTech Solutions Pvt Ltd · Editor, Keys & Coffee

Shivam Kaushik is the founder of QuibbleTech Solutions Pvt Ltd and the editor of Keys & Coffee. He is not a licensed loan officer or financial adviser. Every guide here is written in plain English and checked against official sources such as the CFPB, HUD, Fannie Mae, Freddie Mac and the Federal Reserve. For advice on your own loan, talk to a licensed lender.

Follow on Google Instagram Add Keys & Coffee on Google

Keys & Coffee is an independent education site. We are not a lender or mortgage broker, we do not take loan applications or payments, and nothing here is financial advice. This site is not affiliated with Axia Home Loans, Axia Financial, LLC, or Planet Home Lending. Rates and rules change often — always confirm details with a licensed loan officer and check any lender on the NMLS Consumer Access site.