Struggling to choose the best low-down-payment mortgage option?
With rising home prices, many buyers are turning to creative mortgage strategies like the 80-10-10 mortgage to lower upfront costs and avoid extra fees. But how does it stack up against popular choices like FHA loans, VA loans, and 3% down conventional loans?
In this detailed guide, you’ll discover the advantages, drawbacks, and key comparisons to help you make a confident decision — whether you’re a first-time buyer, a real estate investor, or a mortgage industry professional.
An 80-10-10 mortgage splits financing into two loans plus a small down payment, helping you avoid PMI and potentially lower monthly payments. However, government-backed loans (FHA, VA) and low-down conventional loans may be easier to qualify for and better suited to buyers with lower credit scores or less savings.
What Is an 80-10-10 Mortgage? And Why It Matters
An 80-10-10 mortgage, often called a piggyback loan, is a two-loan strategy:
- 80% – primary mortgage
- 10% – second mortgage (usually a home equity loan or HELOC)
- 10% – your own down payment
Why it matters:
Traditionally, lenders require private mortgage insurance (PMI) if you put down less than 20%. PMI typically adds $100–$300+ to your monthly payments — money you never get back.
By layering two loans, the 80-10-10 structure keeps your first mortgage under the 80% loan-to-value (LTV) threshold, letting you skip PMI entirely.
Quick Example:
You’re buying a $400,000 home:
- $320,000 (80%) – First Mortgage
- $40,000 (10%) – Second Mortgage
- $40,000 (10%) – Down Payment (your cash)
Instead of paying PMI or scrambling for $80,000 cash (20% down), you only need $40,000 upfront.
Key Statistics:
According to the Urban Institute, avoiding PMI could save borrowers approximately $10,000–$15,000 over the first five years of homeownership.
Benefits and Challenges of 80-10-10 Mortgages
Is the 80-10-10 right for you? Let’s dive into the pros and cons.
Top Benefits:
- No PMI: Avoid monthly PMI charges, saving you thousands over time.
- Lower Down Payment: Only 10% needed upfront, making homeownership more accessible.
- Potential Tax Advantages: In some cases, interest on both loans may be tax-deductible (consult a tax professional).
- Flexible Loan Structures: Some lenders offer fixed-rate or adjustable-rate second mortgages to fit your goals.
Key Challenges:
- Higher Credit Requirements: Lenders often prefer 680+ credit scores for piggyback loans.
- Two Loan Payments: Managing two loans can be administratively more complex.
- Limited Availability: Not all lenders offer 80-10-10 programs.
- Second Mortgage Terms: Your second loan might have a higher interest rate than your primary mortgage
Comparing 80-10-10 to Other Low-Down Payment Options
Here’s how the 80-10-10 mortgage stacks up against other popular choices:
Feature |
80-10-10 Mortgage |
FHA Loan |
Conventional 3% Down Loan |
VA Loan |
| Down Payment | 10% | 3.5% | 3% | 0% |
| PMI Required? | No | Yes | Yes (unless 20% down) | No |
| Credit Score Needed | 680+ recommended | 580 minimum | 620 minimum | 620 minimum |
| Upfront Costs | Moderate | Low | Low | Very Low |
| Best For | Good credit, avoiding PMI | Low credit, small savings | First-time buyers, good credit | Veterans, service members |
Key Takeaways:
- Best for Strong Credit and Cash Reserves: 80-10-10 mortgage
- Best for Low Credit: FHA loan
- Best for Veterans: VA loan
- Best for Minimal Down Payment: 3% conventional loan
How to Get an 80-10-10 Mortgage: Step-by-Step
Interested in pursuing an 80-10-10 mortgage? Here’s how you can start:
Step 1: Check your credit score. Aim for 680+ for best loan terms.
Step 2: Calculate your total available cash for down payment and reserves.
Step 3: Shop around for lenders that offer piggyback loan programs — not every lender provides 80-10-10 structures.
Step 4: Get pre-approved for both the primary mortgage and second mortgage.
Step 5: Compare closing costs carefully. A second mortgage may carry additional fees.
Step 6: Lock your rates and proceed to closing — welcome to homeownership without PMI!
FAQs About 80-10-10 Mortgage vs. Other Low-Down Payment Options
What is an 80-10-10 mortgage in simple terms?
An 80-10-10 mortgage uses two loans and a 10% down payment to help you avoid private mortgage insurance (PMI).
Is an 80-10-10 mortgage better than FHA?
If you have strong credit and savings, yes — 80-10-10 can save you from paying lifelong PMI costs associated with FHA loans.
Are 80-10-10 mortgages hard to get?
They can be harder to qualify for due to credit score and lender availability requirements. Not every lender offers them.
Can you refinance an 80-10-10 mortgage later?
Yes. Many borrowers refinance to combine the two loans into a single traditional mortgage once equity increases.
Who should avoid an 80-10-10 mortgage?
If you have limited cash reserves, poor credit, or want a simpler loan setup, you might prefer a traditional low-down-payment mortgage.
Conclusion: Which Option Wins?
An 80-10-10 mortgage is an excellent tool for borrowers who want to minimize upfront costs, avoid PMI, and maximize financial flexibility. However, it’s not a one-size-fits-all solution.
- Choose an 80-10-10 if you have good credit and 10% down available.
- Choose an FHA loan if your credit is below 620 or your down payment savings are minimal.
- Choose a VA loan if you’re eligible — it’s often the most powerful option for qualified buyers.
- Choose a conventional 3% down loan if you’re new to buying and prefer a simpler process.
👉 Ready to find the right mortgage for you?
Speak with a trusted mortgage advisor today to explore personalized options, or check out our free mortgage comparison tool to get started.