Bridge loans and 80-10-10 piggybacks both help you buy a home, but they solve different problems. A bridge loan tackles timing (buy before you sell). An 80-10-10 tackles structure (keep the first mortgage at 80% to avoid PMI).
Different Tools, Different Jobs
Choose based on the job you need done—not the latest internet advice.
Objectives: What Each Is Built to Do
Start with the “why” so you’re not comparing apples to oranges. Each option exists to solve a specific pain point in the purchase process.
- Bridge loan → Timing: Unlock equity from your current home so you can make a non-contingent offer and move once.
- 80-10-10 piggyback → Structure: Pair an 80% first mortgage with a 10% second and 10% down to avoid PMI and sometimes jumbo pricing.
In short: use the bridge when you need equity now; use the piggyback when you want to avoid PMI with less than 20% down.
Mechanics: How They Actually Work
Before weighing pros and cons, understand how money flows with each option, from monthly payments to payoff.
- Bridge loan: Short-term, fixed-rate balloon loan (at People Driven Credit Union: 6-month term with payments calculated on a 240-month amortization and the remaining balance due in one balloon at sale or maturity). Funds your new down payment; you’ll briefly carry two payments (bridge + new mortgage).
- 80-10-10 piggyback: Two loans at closing—an 80% first mortgage and a second (often a fixed home equity loan or a variable-rate HELOC) covering ~10%, plus your 10% cash down. You’ll carry two long-term loans after closing.
The bridge is designed to end when your old home sells; the piggyback is designed to be held (and optionally paid down) over time.
Pros & Cons: The Real Trade-Offs
Now the practical advantages and limitations—what people actually feel in their budget, timeline, and stress levels.
- Bridge loan — Pros: Non-contingent offers, one move, keeps your long-term mortgage strategy clean on the new home.
- Bridge loan — Cons: Short-term costs (interest + fees, including a 1% origination fee at People Driven Credit Union), two payments briefly, balloon due at sale/maturity.
- 80-10-10 — Pros: Avoid PMI with < 20% down, potentially smaller first-mortgage balance, flexible payoff of the second.
- 80-10-10 — Cons: Two loans long-term, the second may carry a higher or variable rate, and it doesn’t solve “I need equity from my current home now.”
If timing is your problem, the bridge shines; if PMI and down-payment structure are your problem, the piggyback shines.
Who Each Fits: Quick Matches
Match the tool to the situation. Use these profiles as a gut check before you run the numbers.
- Bridge loan fits: Move-up buyers who need a non-contingent offer, new-build buyers who want to move once, relocations with misaligned dates, equity-rich but cash-conscious households.
- 80-10-10 fits: Buyers with ~10% down who want to avoid PMI, households that don’t need equity from the current home, buyers who can comfortably manage two long-term loans.
If you recognize yourself in one of these profiles, you’re halfway to the right answer already.
Total Short-Term Cost Example (Illustration Only)
Here’s a simple way to think about the immediate costs when you need ~$80,000 for ~3 months to complete your purchase.
- Bridge loan: Interest for ~3 months on the bridge balance + 1% origination fee (PDCU) + third-party costs (appraisal, title, recording). Remaining principal due in a balloon at sale or maturity.
- HELOC as the “10” in an 80-10-10: Interest for ~3 months on drawn funds (typically variable rate; payment may increase with rates) + any program fees; you’ll still hold the second after month three unless you pay it down.
- Sell first: Minimal financing cost in the short window, but consider the cost and hassle of two moves, storage, or temporary housing.
Your actual cost may differ—use your rates and fees for a true apples-to-apples comparison.
Decision Checklist: Choose Based on Your Goal
Answer these in order; your best path usually reveals itself by step three.
- Do you need equity from your current home to write the next offer? Yes → Bridge loan. No → Continue.
- Is your top priority avoiding PMI with < 20% down? Yes → 80-10-10 piggyback. No → Continue.
- Is a non-contingent offer and moving once more valuable than the absolute lowest short-term cost? Yes → Bridge loan. No → Consider sell-first or piggyback based on total cost.
- Are you comfortable with two payments briefly (bridge) or two loans long-term (piggyback)? Pick the setup that fits your cash-flow reality.
If you’re stuck between two answers, running the numbers with real rates and fees usually breaks the tie.
Connect with a Home Equity Specialist
Want a side-by-side with your actual numbers, timelines, and cash-flow? We’ll map it out clearly before you decide.
Connect with a Home Equity Specialist or call 248-263-4100 to talk through your scenario with a Home Equity Specialist.
Important Information
Please review these key details so you can make an informed choice.
- Bridge loan structure: Typically a fixed-rate, short-term balloon. At People Driven Credit Union the term is 6 months with payments calculated on a 240-month amortization and the remaining balance due in a single balloon at sale or maturity.
- Security and risk: Your home secures the loan; failure to repay could result in foreclosure.
- Piggyback second: The second lien may be a fixed home-equity loan or a variable-rate HELOC. Variable-rate warning: your rate and monthly payment may increase over time.
- Eligibility: Membership and eligibility requirements apply. All loans subject to credit approval, income/asset verification, acceptable collateral, and program guidelines.
- Costs: Bridge loans at PDCU include a 1% origination fee; members pay applicable third-party costs.
- Rates/terms: Rates, terms, and fees are subject to change without notice. Actual APR depends on creditworthiness, collateral, and loan amount.
- Equal Housing Lender. NMLS #776727.
We’ll provide current disclosures and a personalized estimate so you can compare options confidently.
