By Prerna Kapoor, CLHMS | REAL Brokerage | July 6, 2026
A self-employed client in Castle Pines this spring had 15% to put down on a house and did not want to pay mortgage insurance for the next several years while her income kept growing. Instead of putting less down and paying PMI, or draining her reserves to hit 20%, we structured her purchase as an 80-10-10, sometimes called a piggyback loan. It’s not a new idea, but I’ve had more clients ask about it this year than in the last few combined, mostly because avoiding PMI got more attractive as rates and payments both climbed.
Here’s what an 80-10-10 actually is, why it works the way it does, and who it makes sense for.
What an 80-10-10 loan actually is
An 80-10-10 splits your purchase into two loans instead of one. The first mortgage covers 80% of the purchase price, kept right at the line where lenders stop requiring private mortgage insurance. A second loan, usually a home equity line of credit or a fixed-rate closed-end second, covers another 10%. You bring the remaining 10% as your down payment. The math can flex, 80-15-5 and 75-15-10 both show up too, but 80-10-10 is the version most people mean when they say piggyback loan.
Both loans close at the same time, and both show up on title. You’re not hiding a smaller down payment, you’re financing part of it differently.
Why buyers choose this over just paying for PMI
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PMI exists because the lender is taking on more risk when your down payment is under 20%. It’s not a bad option by default, plenty of my clients use it and drop it later once they hit 20% equity. But PMI is a straight monthly cost with no tax benefit and no equity built from it. A second mortgage, by comparison, is still a loan you’re paying down, and in some cases the interest can be deductible depending on how the funds are used and your specific tax situation, which is a conversation for your accountant, not me.
For buyers who expect their income to rise quickly, or who don’t want a mortgage insurance line sitting on their statement for the next several years, splitting the loan can end up costing less over time than PMI would, especially if the second loan gets paid off or refinanced early.
The catch: what you’re trading for by splitting the loan
The second loan almost always carries a higher rate than your first mortgage, and if it’s a HELOC, that rate is usually variable, which means your payment on that piece can move with the market. You’re also closing two loans instead of one, which means two sets of closing costs and two underwriting files that both have to work. If your combined debt-to-income ratio is already tight, adding a second payment on top of the first can push you past what a lender will approve, even if the total loan amount is similar to what you’d have borrowed anyway.
There’s also a resale and refinance wrinkle. If home values dip, a second lien holder is more exposed than the first, and that can make refinancing the first loan later more complicated until the second is paid down or subordinated.
Who this actually makes sense for
I see this work best for buyers with strong, stable income who have the cash for 10 to 15% down but not a full 20%, self-employed borrowers who want to avoid the extra scrutiny mortgage insurers sometimes add on top of already-thorough underwriting, and buyers purchasing just above the point where a jumbo loan would otherwise kick in, where keeping the first mortgage conforming can mean a meaningfully better rate. It makes less sense if your down payment is closer to 5%, since stacking a second loan on top of that thin an equity cushion increases risk on both sides of the transaction.
Quick answers
Is a piggyback loan the same as PMI? No. PMI is insurance that protects the lender and adds a cost with no equity benefit. A piggyback second loan is actual financing you’re paying down, just at a different rate than your first mortgage.
Can I pay off the second loan early? In most cases yes, and a lot of buyers do exactly that once their income grows or they get a bonus, refinance, or sell an asset.
Do all lenders offer 80-10-10 structures? No. It depends on the lender having both a first mortgage and a second-lien product available, or a relationship with a partner lender who does. Ask early in the process, not after your offer is accepted.
If you’re weighing whether a piggyback structure makes sense for your purchase, I’m happy to walk through the numbers with you and your lender before you decide. My Colorado buyer financing playbook covers the full range of ways to structure a purchase, and my guide to figuring out what you can actually afford is worth reading before you compare loan structures. You can also run the numbers yourself with my Colorado mortgage calculator.
Prerna Kapoor | REALTOR® | Luxury Home Specialist
REAL Brokerage | 720-949-5450 | info@prernakapoor.com
CLHMS • RENE • PSA • ABR | International Sterling Society Award Winner
Prerna specializes in residential real estate across Parker, Aurora, Lone Tree, Castle Pines,
Highlands Ranch, Cherry Creek, Greenwood Village, and Centennial. She speaks English, Japanese,
and Hindi.
