A piggyback loan is a second mortgage taken out alongside a first mortgage, usually to shrink the cash down payment or keep the first loan under 80% of the price and avoid private mortgage insurance. FHA buyers rarely need one, because FHA already allows 3.5% down with a 580 credit score, and a second loan cannot remove FHA mortgage insurance.
That distinction matters because “80-10-10” shows up constantly in online home-buying advice, and most of it was written for a different financing path. This piggyback loan explainer covers how the structure works, how FHA treats secondary financing, the current FHA numbers, a worked monthly cost example in Henrico County, and when each structure makes sense. All figures are as of October 2026.
How an 80-10-10 Piggyback Loan Is Built
The name is a shorthand for three pieces of the purchase price. Take a $350,000 home. The first mortgage covers 80%, or $280,000. A second mortgage covers 10%, or $35,000. The buyer pays the remaining 10%, or $35,000, in cash. The second loan is either a home equity line of credit (HELOC) or a fixed-rate second mortgage, and it sits behind the first loan in lien position. Lenders call the combined total the CLTV, or combined loan-to-value ratio. In this example it is 90%.
Two variants appear often. An 80-15-5 uses a 15% second loan and a 5% cash down payment. An 80-20-0 uses a 20% second loan and no cash down, though few lenders offer it today.
Why the structure exists
The original purpose was narrow. On non-FHA financing, a first mortgage above 80% of the price generally triggers private mortgage insurance. Capping the first loan at 80% and putting the rest in a second loan was a way to sidestep that charge. That is background only. It is not how FHA financing works, and the rest of this article stays with FHA.
What the structure does not do
A common misconception is that a piggyback means no mortgage insurance and therefore a lower total cost. Neither follows automatically. The second loan usually carries a higher interest rate than the first, often a variable rate if it is a HELOC. You make two monthly payments instead of one, and the second loan may carry its own closing costs. The CFPB explains how HELOCs and second mortgages differ, including variable-rate risk, at consumerfinance.gov. Whether the combination saves money depends on the actual rates on both loans, not on the label.
Why Duane Buziak Rarely Pairs a Piggyback With an FHA Loan
The gap a piggyback fills is mostly gone under FHA. A borrower with a 580 score or higher can buy with 3.5% down on a single loan. On a $350,000 purchase, that is $12,250 in cash, and no second lien is needed to get there. Duane Buziak typically finds that the buyers asking about 80-10-10 are really asking how to lower their upfront cash, and FHA already answers that.
FHA’s secondary-financing rules
FHA does not let a borrower attach a second lien freely. Under HUD Handbook 4000.1, subordinate financing on an FHA purchase must be subordinate to the FHA-insured first mortgage, and permitted sources are generally limited to government agencies, nonprofit organizations, and certain family or employer sources. The combined loan-to-value ratio is also capped. A commercial second mortgage or HELOC from an ordinary lender is not the kind of secondary financing FHA contemplates for a purchase, so do not plan around one. Read the current subordinate-financing language directly in HUD Handbook 4000.1 (as of October 2026), because permitted sources and the CLTV cap are rule-dependent and HUD updates the handbook periodically.
Mortgage insurance does not go away
FHA charges an upfront mortgage insurance premium (UFMIP) of 1.75% of the base loan amount, plus an annual MIP paid monthly. A piggyback is designed to dodge private mortgage insurance, which is a different product. It cannot remove UFMIP or annual MIP on an FHA first loan, because those charges attach to the FHA loan itself. When the down payment is under 10%, annual MIP generally runs for the life of the loan; at 10% or more down, it generally drops off after 11 years (verify against Handbook 4000.1).
The FHA-compatible version
The legitimate way to pair FHA with secondary money is down payment assistance (DPA) from a state housing finance agency. Programs vary by state, and some are structured as a second lien that meets FHA’s rules. Terms, eligibility, and funding availability change often, so confirm them with the agency before you build a plan around one.
FHA Credit Tiers, 2026 Loan Limits, and MIP Rates
Three sets of numbers shape most FHA purchase decisions. Each below is stated as of October 2026, and you should re-check them against the linked HUD sources, since figures older than 90 days should not be relied on.
Credit score tiers
Source: HUD Handbook 4000.1.
- 580 and above: eligible for maximum financing, which means 3.5% down.
- 500 to 579: eligible with at least 10% down.
These are FHA minimums. Individual lenders can add overlays, meaning stricter score or debt-to-income requirements than FHA itself sets. Because Duane Buziak works as a broker with access to hundreds of wholesale lenders, he can place a borrower with a lender whose overlays fit the file. He can also run a NoTouch Credit Pull, a soft pull with no hard inquiry, to see where you stand first.
2026 FHA loan limits
Source: HUD Mortgagee Letter 2025-23 (see HUD mortgagee letters), as of October 2026.
- 1-unit floor (standard areas): $541,287.
- 1-unit ceiling (high-cost areas): $1,249,125.
- Henrico, Chesterfield, and Hanover counties: exact county limits must be confirmed on the HUD FHA limits lookup before you rely on them. This article does not state them because they have not been verified here.
MIP rate structure
Sources: Mortgagee Letter 2015-01 for UFMIP and Mortgagee Letter 2023-05 for annual MIP, both as of October 2026.
- UFMIP: 1.75% of the base loan amount, financed into the loan or paid at closing.
- Annual MIP, 30-year term, base loan at or under $726,200, LTV above 95%: 0.55%.
- All other tiers: the rate changes with loan term, loan amount, and LTV. Take them from Appendix 1.0 of Handbook 4000.1 rather than from a rule of thumb. A single “typical” MIP number is misleading, so always identify the tier that applies to you.
Worked Monthly Cost Example in Henrico County
This is an illustration, not an offer. Suppose a buyer purchases a $350,000 home in Henrico County, Virginia, with 3.5% down. The rate below is an assumption chosen for the example and will not match a quote you receive.
The FHA single-loan payment
- Down payment (3.5%): $12,250.
- Base loan: $337,750.
- UFMIP (1.75%): $5,910.63, financed.
- Total financed amount: $343,660.63.
- Principal and interest: about $2,116 per month, assuming an illustrative 6.25% rate on a 30-year term.
- Annual MIP (0.55%): about $154.80 per month in the first year. MIP is calculated on the base loan amount, not the financed UFMIP, so $337,750 x 0.55% = $1,857.63 per year. HUD calculates it on the average outstanding balance, so the figure drifts down slightly in later years.
- Property tax: Henrico’s rate is $0.85 per $100 of assessed value (henrico.us, as of October 2026). Assuming an assessment equal to the price, that is $2,975 per year, or about $247.92 per month.
- Homeowners insurance: assumed at $1,800 per year, or $150 per month. Actual premiums vary widely.
Total estimated monthly cost: about $2,669.
A hypothetical split-loan comparison
Now imagine the same buyer, with the same $12,250 down, tries a split structure that FHA would not permit with a commercial second: a first loan of $280,000 (80%) and a second loan of $57,750. Assume the first carries the same illustrative 6.25% rate, and the second is a 20-year loan at an illustrative 10%.
- First-loan principal and interest: about $1,724.
- Second-loan principal and interest: about $557.
- Combined: about $2,281 per month, versus about $2,271 for FHA principal, interest, and MIP together.
Taxes and insurance are identical either way. In this illustration, the split structure costs about $10 more per month, and that is before the second loan’s own closing costs and before any rate adjustment if it were a HELOC. It also assumes the borrower qualifies for the first loan at the same rate, which is a generous assumption. The point is not that these exact numbers will repeat. It is that a higher-rate second lien can absorb most or all of the mortgage insurance savings.
FHA Single Loan vs. Piggyback Structure, and the Broker Advantage
Set side by side, the practical differences favor the single FHA loan for most buyers who are using low down payment financing.
- Down payment: FHA single loan, 3.5% with a 580+ score. A first-plus-second structure typically aims for 5% to 10% cash.
- Number of payments: FHA, one. Split structure, two.
- Rate type: FHA, one rate on the whole loan, available as a fixed rate. Split structure, the second is often a variable-rate HELOC.
- Mortgage insurance: FHA, UFMIP plus annual MIP, known and published. Split structure, aims to avoid private mortgage insurance but adds a higher-rate second loan.
- Underwriting complexity: FHA, one file, one set of guidelines. Split structure, two lenders or products, with CLTV and lien-position requirements to coordinate.
What Duane Buziak does as a broker
Duane Buziak is a mortgage broker, not a lender, so he is not tied to one rate sheet. He shops an FHA purchase across hundreds of wholesale lenders and checks each lender’s overlays on credit score and debt-to-income before submitting a file. Under his Dare to Compare approach, you can set his pricing against other quotes. National lenders such as Rocket and Movement are worth including in that comparison, so you can see how their FHA terms line up. Compare the same loan amount, rate, and fees on each.
State notes
Virginia is the primary market, with Florida, Georgia, Kentucky, Maryland, North Carolina, South Carolina, Tennessee, Texas, West Virginia, and DC also served. In Virginia, the Virginia Housing Development Authority (VHDA) offers DPA options. In Florida, Florida Housing publishes its programs. Confirm each program’s current terms directly. Florida buyers should also know that the homestead exemption under Florida Statute 196.031, up to $50,000 in assessed value, generally does not apply in the first year of ownership, so first-year taxes can run higher than later years. Verify current terms with the county property appraiser.
For pre-qualification, FHA Mortgages by Duane Buziak uses a NoTouch Credit Pull, a soft pull with no hard inquiry. Many lenders require a hard pull for the same quote.
Piggyback Loan Questions FHA Buyers Ask
Can I use a piggyback loan with FHA?
Generally not with a commercial second mortgage. As of October 2026, HUD Handbook 4000.1 limits permitted secondary financing sources to government agencies, nonprofits, and certain family or employer sources, with a combined loan-to-value cap. Confirm the current language at hud.gov.
Does a piggyback avoid FHA MIP?
No. UFMIP and annual MIP attach to the FHA-insured first loan, and a second loan cannot remove them. A piggyback is built to avoid private mortgage insurance, which is a different charge.
What is an 80-10-10 loan?
It is a first mortgage for 80% of the price, a second mortgage for 10%, and a 10% cash down payment. The second loan is usually a HELOC or fixed-rate second.
Is a piggyback loan the same as down payment assistance?
No. A piggyback second comes from a commercial lender and is repaid at its own rate. DPA comes from a program such as a state housing agency, and its terms depend on that program. Some DPA fits within FHA’s secondary-financing rules.
Can a family member give me the down payment instead?
Often yes. FHA generally allows documented gift funds from approved donors such as relatives, and a gift is not a loan. As of October 2026, confirm donor and documentation requirements in Handbook 4000.1.
What credit score do I need for FHA?
FHA’s minimum is 580 for 3.5% down, and 500 to 579 requires 10% down (HUD Handbook 4000.1, as of October 2026). Lender overlays can be stricter, which is where a broker shelf helps.
Can I get FHA with 3.5% down and no second loan?
Yes. A single FHA loan with 3.5% down is the standard path. Seller concessions and gift funds can help with cash to close, and no-out-of-pocket closing options may be possible depending on the file.
Is a HELOC piggyback riskier than a fixed second?
Usually, yes. A HELOC rate is typically variable, so the second payment can rise, while a fixed second keeps a steady payment. The CFPB explains the difference at consumerfinance.gov.
One FHA Loan Is Usually the Simpler Path
For most FHA buyers, a single loan with 3.5% down is simpler and cheaper to manage than a piggyback. One payment, one rate, and published mortgage insurance terms are easier to budget around than two loans with different rates and rules. A piggyback can make sense in other contexts, but it rarely improves on what FHA already offers a buyer with a 580 score.
If you want to see where you stand, FHA Mortgages by Duane Buziak can start with a NoTouch Credit Pull pre-qualification, a soft pull with no hard inquiry. Ready to take the first step toward homeownership with an FHA loan tailored to your needs? Schedule your free consultation today and discover how our award-winning team can help you navigate the path to your new home with competitive rates and expert guidance. As a broker with hundreds of wholesale lenders, Dare to Compare pricing, and no-out-of-pocket closing options where available, Duane Buziak will compare FHA terms for you. Call 804-212-8663 or visit 4860 Cox Rd, Glen Allen, VA 23060. Licensed in FL, GA, KY, MD, NC, SC, TN, TX, VA, WV, and DC.
