What Is an 80 10 10 Loan?

Are you dreaming of buying a new home but struggling with the down payment? Enter the 80 10 10 loan a financing option that might just be the solution you’re looking for. In this article, we’ll dive into the details of what an 80 10 10 loan entails, its benefits, eligibility requirements, and how you can obtain one. So, let’s explore this unique loan structure that can help you achieve your homeownership goals.

What Is an 80-10-10 Loan
What Is an 80-10-10 Loan

What Is An 80 10 10 Loan?

The 80 10 10 loan is a mortgage arrangement that involves three components: an 80% first mortgage, a 10% second mortgage, and a 10% down payment. This loan structure allows borrowers to achieve homeownership while avoiding the need for a large down payment and potentially costly private mortgage insurance (PMI).

The first mortgage covers 80% of the home’s purchase price and is typically obtained from a primary lender. The second mortgage makes up an additional 10% and helps borrowers avoid the requirement of a 20% down payment. It often comes with different terms, including a potentially higher interest rate. The borrower contributes a 10% down payment to complete the financing structure. The 80-10-10 loan offers flexibility and affordability, making homeownership more accessible to a broader range of individuals and families.

When considering an 80-10-10 loan, it’s essential to evaluate your financial situation, compare loan offers, and consult with mortgage professionals. This will help you determine if an 80-10-10 loan aligns with your homeownership goals and financial capabilities.

Benefits of The 80 10 10 Loan

The 80-10-10 loan offers several advantages that make it an appealing option for homebuyers:

  • Avoidance of PMI: By structuring the loan with an 80% first mortgage and a 10% down payment, borrowers can sidestep the need for private mortgage insurance. This saves them from the additional cost of PMI which is usually required for loans with a down payment of less than 20%.
  • Affordability: The 80-10-10 loan enables homebuyers to afford higher-priced properties while maintaining a smaller down payment. This can be especially beneficial in competitive real estate markets where prices may exceed the borrower’s immediate savings.

These are some of the benefits of using the 80 10 10 loans.

Eligibility and Qualifications

To qualify for an 80-10-10 loan, lenders typically consider the following:

  • Credit Score: A good credit score is crucial to demonstrating financial responsibility and loan repayment capability.
  • Income: Lenders will evaluate your income to ensure you have the means to repay both mortgages.
  • Debt-to-Income Ratio: Your debt-to-income ratio, which compares your monthly debts to your income, will be assessed to determine your ability to manage the loan payments.
  • Additional Criteria: Lenders may have specific requirements regarding employment history, asset verification, and other factors.

Pros and Cons of the 80 10 10 Loan


  • Flexibility: The 80-10-10 loan structure offers flexibility, allowing borrowers to tailor their financing to their specific needs. It provides an alternative to the traditional 20% down payment, enabling more options for homebuyers.
  • Affordability: By avoiding the need for a full 20% down payment and PMI, borrowers can enjoy lower monthly payments compared to a single mortgage with PMI. This can free up funds for other purposes or provide more financial breathing room.


  • Higher Interest Rate: It’s important to note that the second mortgage component of the 80-10-10 loan may have a higher interest rate compared to the first mortgage. This can result in slightly higher overall borrowing costs.
  • Risk Evaluation: As with any financial decision, it’s crucial to evaluate your personal financial circumstances and consider the potential risks associated with the loan structure. Make sure you have a clear understanding of the interest rates, payment obligations, and long-term financial implications.

How to Obtain an 80 10 10 Loan

To get started with an 80 10 10 loan, follow these steps:

  • Research Different Lenders: Look for lenders that offer 80-10-10 loans and compare their terms, interest rates, fees, and customer reviews. This will help you find a reputable lender that suits your needs.
  • Seek Professional Advice: Consult with mortgage professionals who can guide you through the process and provide personalized recommendations based on your financial situation. They can help you understand the nuances of the loan structure and assist in making an informed decision.

Patiently wait for the process.

Application and Approval Process

When applying for an 80-10-10 loan, keep the following in mind:

  • Prepare Documentation: Gather all necessary documentation, including income statements, tax returns, bank statements, and asset information. Be prepared to provide accurate and detailed information to support your application.
  • Maintain Communication: Stay in touch with your lender throughout the application process. Promptly respond to any requests for additional information or documentation to ensure a smooth approval process.


The 80 10 10 loan opens up opportunities for homebuyers to overcome the hurdle of a large down payment while avoiding private mortgage insurance. It provides a flexible and affordable path to homeownership, although it’s important to carefully consider the specific terms and conditions of the loan. As with any financial decision, conduct thorough research, seek professional advice, and evaluate your personal circumstances. The 80-10-10 loan may just be the key that unlocks the door to your dream home. Happy house hunting!

Frequently Asked Questions (FAQs)

Can I Use The 80-10-10 Loan for Any Type Of Property?

Yes, the 80-10-10 loan can be used for various types of properties, including single-family homes, townhouses, and condominiums. However, it’s essential to check with individual lenders as they may have specific property eligibility requirements.

Will I Be Able to Deduct the Interest Paid on Both Mortgages for Tax Purposes?

In most cases, you should be able to deduct the interest paid on both the first and second mortgages for tax purposes. However, tax laws can vary, and it’s recommended to consult with a tax professional to understand the specific deductions and eligibility criteria based on your circumstances.



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