Get the Facts: The ‘Piggyback’ Mortgage


Simply put, a piggyback loan is a second mortgage or lien on top of the first mortgage. Hence the term, “piggyback”. One of the loans makes up the larger portion of the home’s value and the second loan makes up for whatever cash is needed to make up the standard 20% down payment. The second mortgage is more commonly a revolving line of credit in the form of a home equity line of credit (HELOC).

The primary benefit of a piggyback loan is that is helps borrowers avoid private mortgage insurance (PMI) payments, while making a down payment of less than the standard 20%. PMI is typically required for loans with less than a 20% down payment. The lender counts the combination of the down payment and second mortgage as a full 20% down payment. This is helpful for borrowers who can’t afford to pay the whole 20% standard down payment out-of-pocket.



  • Piggyback loans help borrowers avoid having to pay PMI. PMI can be expensive and can hinder a faster repayment of the loan.
  • Interest paid on a piggyback loan is tax deductible.
  • This combination loan may help avoid the strict guidelines of the maximum conforming loan limit. Read more about jumbo loans.

    Other Considerations

  • Some piggyback loans require a large balloon payment at the end of the life of the loan. This can be a surprise to some borrowers if they haven’t planned for the payment. However, you may be able to refinance the loan when the payment is due.

    No two mortgages are alike. A lender will factor in a borrowers’ budget, financial discipline, and risk tolerance to help determine the best loan program. While a piggyback loan may be best for one type of borrower, it may or may not be the best choice for you.

Before you make any kind of financial decision, talk to one of our mortgage bankers to go over your options. There are many loan products available and we’ll be able to help you determine the mortgage program that’s right for you. We promise to make the process as quick and stress-free as possible. Contact us today or apply online.

    Each mortgage transaction is unique and will be subject to the following conditions; property type, credit score, loan amounts, maximum number of properties owned, minimum trade lines, house payment history, bankruptcies, foreclosures, short sales, deeds-in-lieu, collection/judgments, tax liens, disputed accounts, debt to income ratios, student loans outstanding, and co-signed loans outstanding. Max Cash Out: Max HELOC $350,000 Primary, $250,000 Second Homes

    Interest rates subject to change without notice. This is not a commitment to lend. Please call for up-to-the-minute rate quotes and pre-approvals. Other restrictions or limitations to any program may apply. NMLS Consumer Access. Questions or concerns can be directed to Licensed by the Department of Corporations under the Residential Mortgage Act.

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