80-10-10 Piggyback Loan Calculator
Compare an 80/10/10 piggyback mortgage (first mortgage plus a home-equity loan or HELOC) with a single loan paying PMI — monthly payments, total interest and PMI over your horizon, the break-even PMI rate, the year the cheaper option switches, and a year-by-year schedule.
How it works
Piggyback: 80% first mortgage + (20% − down) second lien; single: (100% − down) loan + PMI until LTV ≤ 80% (auto-cancel at 78%, or the loan’s midpoint); compare interest + PMI + extra fees over the horizon; break-even PMI = (piggyback cost − single-loan interest) ÷ (months of PMI × loan ÷ 12)
Borrowers with less than 20% down have two ways to handle the lender’s extra risk. A single 90% mortgage carries private mortgage insurance, typically 0.3–1.5% of the loan a year depending on credit score and down payment, until the balance falls to 80% of the original value (you can request cancellation then; the lender must drop it at 78%, and it ends by the loan’s midpoint at the latest). An 80-10-10 “piggyback” keeps the first mortgage at 80% (no PMI, best rate) and covers the gap with a second loan — either a fixed home-equity loan that amortizes from the start, or a HELOC that usually charges interest only for a 10-year draw period. Which wins depends on the PMI rate, the spread between the two rates and how long you keep the loans: PMI disappears after a few years while the second loan’s interest continues. The calculator simulates both month by month, shows the cumulative cost each year, the PMI rate at which they break even and the year the cheaper option switches. Under More options you can choose how PMI ends (including an early appraisal when prices rise) and add the second loan’s extra closing costs.
Worked example
$500,000 home with 10% down: $400,000 at 6.5% for 30 years plus $50,000 at 8.5% over 15 years costs $2,528 + $492 a month; a $450,000 loan at 6.625% is $2,881 plus $225 of PMI for about 8 years. Over seven years the piggyback costs $199,610 in interest and the single loan $218,652 in interest and PMI, so the piggyback saves about $19,042 — mainly because the single loan borrows $50,000 more at the first-mortgage rate. Switch the second loan to a HELOC and the saving drops to about $14,862, because its balance does not shrink during the interest-only years.
Sources: CFPB — When can I remove private mortgage insurance (PMI)? · Fannie Mae Servicing Guide — borrower-initiated PMI termination based on current value
Frequently asked questions
Can I get rid of PMI early?
Yes — once you have 20% equity (by paydown or an appraisal showing appreciation) you can request cancellation; lenders must auto-cancel at 78% of the original value, and PMI must end at the loan’s midpoint at the latest. With a new appraisal most lenders want 75% loan-to-value after two years or 80% after five. FHA loans are different: their MIP is usually permanent.
Is the HELOC interest deductible?
Only if the money was used to buy, build or substantially improve the home securing it — a purchase-money piggyback qualifies, within the $750,000 total mortgage debt cap. From 2026, PMI premiums are deductible again for many itemizers too.
What is the break-even PMI rate?
It is the PMI rate at which the two options cost exactly the same over your horizon. If the PMI you are quoted is above it, the piggyback is cheaper; if it is below, the single loan with PMI wins.
Should the second loan be a home-equity loan or a HELOC?
A fixed home-equity loan has a steady payment and shrinks from the first month. A HELOC is usually cheaper at first because you pay only interest, but its rate floats and the balance stays put until repayment starts, so over several years it usually costs more interest.
Why does the horizon matter so much?
PMI is front-loaded: it stops once you reach 20% equity, while the second loan keeps charging a higher rate until it is repaid. If you plan to sell or refinance within a few years, the piggyback often wins; if you keep the loan for decades, a cheap PMI can make the single loan better.
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Educational estimate, not financial or tax advice. Rules and thresholds change — confirm current figures with the IRS/HMRC or a qualified adviser before acting.