How to use the 80 10 10 piggyback loan calculator
- Enter the home price and the share of it covered by the first mortgage and by the second loan. In an 80/10/10 split those are 80% and 10%, and the remaining 10% is the down payment.
- Enter the rate and term for each loan. The rates shown are examples, so use the quotes you have.
- Optionally open Advanced options and enter a monthly mortgage insurance amount you were quoted for one larger loan, so the comparison includes it.
- Read both payments, the total interest, and how the combined payment compares with a single loan for 90% of the price at the first rate. Use Copy, Print or CSV to keep the result.
Formula
Payment = P x r / (1 - (1 + r)^-n)
r = annual rate / 12, n = years x 12
Down payment = price - first loan - second loan
Interest = payment x n - loan amount
With a rate of 0 the payment is the loan divided by the number of months. Each loan is a fixed rate loan paid in equal monthly installments.
A 400,000 dollar home
On a $400,000 home, an 80/10/10 split gives a $320,000 first mortgage, a $40,000 second loan and a $40,000 down payment. With the first at 6.5% for 30 years the payment is $2,022.62. With the second at 9% for 15 years the payment is $405.71. Together that is $2,428.32 a month.
One loan for $360,000 at 6.5% for 30 years would cost $2,275.44 a month, so the two loans cost $152.88 more each month, before any mortgage insurance on the single loan. Total interest on the two loans is $441,169.56.
What a piggyback loan is
In a piggyback arrangement a buyer takes a second loan alongside the first mortgage so the first loan stays at a lower share of the price. The first loan then needs a smaller down payment, and the buyer may avoid mortgage insurance that some lenders require on larger loans. The second loan often has a higher rate and a shorter term.
Whether it saves money depends on those numbers. Enter a quoted insurance amount in the advanced box to compare fairly. The PMI calculator and the loan to value calculator show how the share of the price borrowed affects the cost.
What is not included
The result covers principal and interest only. Property taxes, home insurance, closing costs and fees are separate. The second loan may be a line of credit with an interest-only period and a rate that can change, which this fixed payment calculation does not model. Lenders also set their own rules about the shares allowed.
To see the cost of the whole mortgage including taxes, use the mortgage calculator, and to plan the down payment itself, the down payment calculator.
Assumptions and limits
- Both loans are fixed rate with equal monthly payments, and each runs for its full term.
- The down payment is the part of the price not covered by the two loans.
- Rates, terms and the insurance amount are examples to replace with your own quotes.
- Taxes, home insurance, fees, points and closing costs are not included.
Frequently asked questions
What does 80/10/10 mean?
An 80% first mortgage, a 10% second loan and a 10% down payment, as shares of the home price. Other splits, such as 80/15/5, work the same way here.
Is a piggyback loan cheaper than a single loan with insurance?
It can be, or not. Compare the two payments and the total interest, and include the quoted insurance on the single loan. The second loan's higher rate is the main cost.
Can the two loans have different terms?
Yes. Each loan has its own rate and term, and its own payment. The combined payment is simply the sum.
Why is total interest so large?
Because interest on a 30 year loan builds over many years. The total shown is the payments added up minus the amount borrowed, so it is naturally large for long terms.