Piggyback Loan Explained
A Piggyback Loan is a two-loan structure used to avoid mortgage insurance, lower the down payment, or stay below jumbo loan limits. The most common version is the 80/10/10: 80% first mortgage, 10% second mortgage, and 10% down payment.
How Piggyback Loans Work
Instead of taking one large mortgage, the borrower uses a first mortgage plus a second mortgage. This reduces the loan-to-value on the first mortgage, helping avoid PMI and sometimes securing better rates.
Common Piggyback Structures
- 80/10/10 – 80% first mortgage, 10% second mortgage, 10% down
- 80/15/5 – 80% first mortgage, 15% second mortgage, 5% down
- 75/15/10 – used for high-cost or jumbo scenarios
Who Piggyback Loans Are For
- Borrowers wanting to avoid PMI
- Buyers with limited down payment
- Borrowers staying under jumbo loan limits
- Homeowners wanting better first-mortgage pricing
- Borrowers using a HELOC as the second mortgage
What Lenders Look At
- Credit score
- Down payment
- Debt-to-income ratio
- Property type
- Strength of both loans
- Income stability
Basic Requirements
- 680+ credit score (varies by lender)
- 5%–10% down payment
- Strong credit profile
- Acceptable DTI for both loans
- Primary or second home (investment varies)
Loan Structure
- First mortgage: fixed or adjustable
- Second mortgage: fixed loan or HELOC
- Two separate payments
- No mortgage insurance
- Helps avoid jumbo pricing
Property Types Allowed
- Primary homes
- Second homes
- Single-family homes
- Condos and townhomes
- Some lenders allow 2–4 units
Benefits
- Avoid PMI
- Lower down payment options
- Stay under jumbo limits
- Flexible second-mortgage options
- Can improve first-mortgage pricing
Next Steps
If you want to avoid PMI or reduce your down payment, a Piggyback Loan may be the best option. Review your credit, compare second-mortgage options, and confirm the structure that fits your goals.
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