80/10/10 Piggyback Mortgage Calculator
Evaluate 80/10/10 piggyback loan structures against paying PMI on a single 90% LTV mortgage. Enter both rates to get your true blended cost of borrowing.
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Why use an 80/10/10 piggyback structure?
Putting less than 20% down on a home usually triggers mandatory Private Mortgage Insurance. By taking out a second mortgage for 10% of the purchase price alongside your 80% first mortgage, your primary loan stays at 80% loan-to-value, which eliminates the PMI requirement. You are trading an insurance premium that builds no equity for interest on a second loan that does pay down principal.
The trade-off is only worth it if the resulting blended rate comes in below the rate you would pay on a single loan plus its PMI. That comparison is what this calculator settles.
How the blended rate is calculated
Each loan is weighted by its balance, not treated equally — the 80% first mortgage dominates the result:
Because the first mortgage carries eight times the balance of the second in an 80/10/10, a second-mortgage rate two points higher only moves the blended rate by roughly a fifth of a point. That leverage is the whole reason the structure works.
Worked example: $500,000 home, 10% down
You put down $50,000 and need $450,000 in financing. Compare the piggyback against a single 90% LTV loan carrying PMI at 0.75% per year.
| Structure | Balance | Rate | Year-1 cost |
|---|---|---|---|
| Piggyback — first mortgage | $400,000 | 6.50% | $26,000 |
| Piggyback — second mortgage | $50,000 | 8.50% | $4,250 |
| Piggyback blended | $450,000 | 6.72% | $30,250 |
| Single loan — interest | $450,000 | 6.50% | $29,250 |
| Single loan — PMI | $450,000 | 0.75% | $3,375 |
| Single loan + PMI | $450,000 | 7.25% | $32,625 |
The piggyback blends to 6.72% against a PMI-inclusive 7.25% — a saving of about $2,375 in the first year, even though the second mortgage costs two full points more than the first. And unlike the PMI premium, every dollar of the second mortgage payment that is not interest reduces what you owe.
When the piggyback loses
- The second is a variable-rate HELOC and rates rise. Most piggyback seconds are tied to prime. A three-point move on the second adds roughly 0.33 points to an 80/10/10 blended rate, which can erase the PMI advantage.
- Your PMI would have been cheap or short-lived. Strong credit buys PMI near the bottom of the 0.5%–1.5% range, and it terminates automatically at 78% LTV. If it would only run four or five years, there is less to avoid.
- You plan to refinance or sell soon. Two loans mean two sets of closing costs now, and a second lien complicates any later refinance — the second lender has to agree to resubordinate.
- Interest deductibility does not apply. Second-mortgage interest is deductible only as acquisition indebtedness within the combined mortgage-interest cap, and only if you itemize. Do not assume the write-off.
Related calculators
- Blended rate mortgage calculator — any first-plus-second combination, not just 80/10/10.
- HELOC calculator — model the variable-rate second on its own.
- Blended rate calculator — the general weighted-average tool.
- Blended rate vs APR — why your blended rate is not your APR.
Frequently asked questions
What is an 80/10/10 piggyback mortgage?
An 80/10/10 piggyback mortgage consists of a first mortgage for 80% of the purchase price, a second mortgage for 10%, and a 10% cash down payment. It allows buyers to avoid paying Private Mortgage Insurance (PMI) without putting 20% down.
How is the blended rate calculated on a piggyback mortgage?
The blended rate weights the 80% first mortgage rate and the 10% second mortgage rate based on their respective loan balances. Multiply each balance by its rate, add the two results, then divide by the combined balance.
Is an 80/10/10 mortgage cheaper than paying PMI?
In many cases yes, especially when second mortgage interest rates are reasonably low and tax-deductible, whereas PMI payments build zero equity.
How do I compare a piggyback blended rate against a loan with PMI?
Add the annual PMI premium, expressed as a percentage of the loan balance, to the single loan's interest rate. That gives you a PMI-inclusive effective rate you can compare directly against the piggyback blended rate. If the blended rate is lower, the piggyback is cheaper while the PMI would have been in force.
What are the other piggyback structures besides 80/10/10?
80/15/5 uses a 15% second mortgage and only 5% down, and 80/5/15 pairs a small second with a 15% down payment. All three keep the first mortgage at 80% loan-to-value, which is the threshold that removes the PMI requirement.
What is the main risk of a piggyback second mortgage?
Second mortgages are frequently HELOCs with variable rates tied to the prime rate. If rates rise, your blended rate rises with them, and the PMI comparison that justified the structure can invert. A fixed-rate second removes that risk but usually prices higher at the outset.
Does PMI ever go away on its own?
On a conventional loan, yes. Under the Homeowners Protection Act the servicer must automatically terminate PMI once the balance reaches 78% of the original value on the amortization schedule, and you may request removal at 80%. That end date matters: a piggyback avoids PMI permanently, so the comparison should only count PMI for the years it would actually have been charged.
Scope. This calculator compares nominal blended interest rates and first-year costs. It does not amortize either loan, model a variable second-mortgage rate over time, include closing costs, taxes, insurance, or HOA dues, or compute the date PMI would terminate. Rates and PMI figures in the example are illustrative. It is not financial advice — get a Loan Estimate from a lender before choosing a structure.
Not an 80/10/10?
Blend any first and second mortgage at any split, with any balances.