A piggyback purchase structure using an 80% first mortgage, 10% second mortgage, and 10% down payment.
An 80-10-10 loan is a piggyback purchase structure consisting of an 80% first mortgage, a 10% second mortgage, and a 10% borrower down payment.
The three percentages describe how the purchase price is funded. The buyer closes with two mortgage liens and two loan obligations, not one blended mortgage.
The structure keeps the first mortgage at 80% of the purchase price in the basic example. Borrowers may consider it when comparing a conventional first mortgage with PMI against a first-plus-second arrangement.
The second 10% is borrowed money. It raises total property-secured debt to 90% of the price, so the combined leverage is not the same as the first mortgage’s 80% LTV.
Whether the structure is useful depends on the pricing and terms of both loans. The second lien may have a higher rate than the first, may be adjustable, and may create additional closing costs or future refinance complexity.
An 80-10-10 option appears during preapproval and loan comparison. The lenders verify that the first mortgage, second mortgage, down payment, and closing funds fit together.
Underwriting includes:
90% combined loan-to-value ratio in the basic splitThe borrower should receive and compare the required disclosures for each loan rather than relying on one combined payment quote.
Avery buys a home for $600,000:
| Funding source | Percentage | Amount |
|---|---|---|
| First mortgage | 80% | $480,000 |
| Piggyback second mortgage | 10% | $60,000 |
| Down payment | 10% | $60,000 |
| Purchase price | 100% | $600,000 |
The first-loan LTV is 80%, while combined mortgage debt is $540,000 and CLTV is 90%. Avery must budget for the first-mortgage payment, second-mortgage payment, taxes, insurance, association dues when applicable, and any other required housing costs.
If the property appraisal is lower than the contract price, the lender may calculate leverage using the applicable lower value. Avery may need more cash, smaller loans, renegotiation, or another financing structure.
| Question | One first mortgage at roughly 90% LTV | 80-10-10 structure |
|---|---|---|
| How many loan payments? | One mortgage payment, plus PMI when applicable | Two mortgage payments |
| Rate structure | One mortgage rate | First and second rates can differ |
| Mortgage insurance | May apply | First-lien PMI may be avoided under the product terms |
| Refinance coordination | One lien to address | Junior lien may require payoff or subordination |
| Closing complexity | One loan package | Two loans must fund and record correctly |
The correct comparison is total cost over the borrower’s expected holding period. A second mortgage with a higher rate can outweigh savings from avoiding PMI.
The piggyback piece may be a closed-end loan with scheduled principal and interest or a HELOC with a draw period and variable payment. An 80-10-10 label does not identify those terms.
Ask whether the second loan has:
Piggyback Loan is the broader simultaneous second-mortgage strategy. An 80-10-10 loan is one specific percentage split.
80-15-5 Loan uses a larger second mortgage and smaller down payment, producing 95% combined mortgage debt in the basic example.
Private Mortgage Insurance (PMI) is insurance associated with eligible conventional first mortgages. An 80-10-10 may avoid PMI on the first loan but substitutes a separate second-lien cost.
Combined Loan-to-Value Ratio (CLTV) measures both mortgages against value. It is 90% in the standard 80-10-10 split, not 80%.
90%, because the 80% first mortgage and 10% second mortgage are both secured by the property.