80-10-10 Mortgage

What Is an 80-10-10 Mortgage?

An 80-10-10 mortgage is a piggyback financing structure in which the homebuyer uses an 80% first mortgage, a 10% second mortgage, and a 10% down payment to buy a home. The structure is usually discussed as a way to avoid private mortgage insurance while still buying with less than a 20% cash down payment.

It is really a financing stack, not a single loan. A borrower using an 80-10-10 arrangement is managing two debts at closing, not one, and that changes payment risk, underwriting complexity, and long-term flexibility.

Key Takeaways

• An 80-10-10 mortgage uses two loans and a 10% down payment.
• The first mortgage covers 80% of the purchase price.
• The second mortgage covers another 10%.
• The structure is often used to avoid PMI on the first mortgage.
• The tradeoff is that the borrower takes on a second lien with its own rate, terms, and risk.

How an 80-10-10 Mortgage Works

The first mortgage covers 80% of the home's price, which often keeps the primary loan at or below the threshold where PMI would otherwise apply. A second mortgage or home-equity-style loan covers another 10%, and the borrower contributes the final 10% in cash.

The structure is often called a piggyback second mortgage because the borrower is layering a smaller second loan behind the primary mortgage rather than simply increasing the size of the first mortgage.

Example Two-Loan Stack

Suppose a home costs $500,000. Under an 80-10-10 structure, the buyer puts down $50,000, takes a first mortgage for $400,000, and adds a second mortgage for $50,000. The buyer reaches the closing table with only 10% cash down, but the first mortgage still sits at 80% of the home's value.

The appeal is that the borrower may avoid PMI on the first mortgage. The cost is that the borrower now has a second debt layer that may carry a different rate, payment schedule, or payoff strategy.

How an 80-10-10 Mortgage Changes Down Payment Structure

Borrowers usually consider an 80-10-10 structure when they want to reduce upfront cash needs without taking a single high-LTV first mortgage that requires PMI. In the right pricing environment, that tradeoff can make sense. But it is not automatically cheaper. The second mortgage can offset the PMI savings depending on its rate and terms.

The right comparison is not just PMI versus no PMI. It is the all-in cost and risk of one loan versus two loans.

80-10-10 Versus A Single High-LTV Mortgage

A single high-LTV mortgage concentrates the borrowing into one first lien and may require PMI. An 80-10-10 splits the financing between a first and second lien. The LTV on the first mortgage is lower, but the borrower still has meaningful total leverage once both loans are counted together.

Some borrowers focus only on the first mortgage and underestimate how much total debt they are really carrying. The combined structure is the real obligation.

The Bottom Line

An 80-10-10 mortgage is a piggyback financing structure with an 80% first mortgage, a 10% second mortgage, and a 10% down payment. It can reduce or avoid PMI on the first mortgage, but it does so by adding a second layer of debt that needs to be evaluated on its full cost and risk.