With many conventional loans, putting down less than 20% means paying private mortgage insurance (PMI), which increases your monthly payment without building you a dollar of equity.

One way to avoid PMI is getting a piggyback mortgage. This type of loan structure lets you pair your primary mortgage with a second, smaller loan that covers the gap your down payment doesn’t. A piggyback isn’t inherently cheaper than PMI, but for some, it might be the preferable way to finance the gap. Here’s what you need to know about piggyback loans to help you decide if it’s the right move for you.

What is a piggyback mortgage?

A piggyback mortgage is two loans closed simultaneously on one home: a primary mortgage covering most of the price, plus a second, smaller loan that closes the gap between your down payment and what you’d need to avoid PMI.

A common piggyback mortgage structure is the 80-10-10: Your first mortgage covers 80% of the price, a second loan covers 10%, and you bring the remaining 10% as a down payment.

Piggyback mortgages commonly keep the first mortgage at 80% LTV to avoid private mortgage insurance. Down payment assistance (DPA) programs help cover your upfront costs and may offer grants, forgivable loans, or second mortgages. However, you may still need to pay mortgage insurance even with down payment assistance.

With a piggyback mortgage, the second loan is often a home equity loan or a home equity line of credit (HELOC). A home equity loan gives you a lump sum at a fixed or adjustable rate. A HELOC lets you borrow as needed during a set draw period and usually has a variable rate, so your payments can rise if rates increase.

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How a piggyback mortgage works

Let’s say you’ve got a $500,000 home and $50,000 available for a down payment, or 10% down. With a conventional mortgage, you could put down $50,000 and borrow $450,000 at 90% LTV, typically with PMI.

With an 80-10-10, however, your first mortgage drops to $400,000. The second loan covers the other $50,000, and your savings cover the rest. You would have two payments to cover, and the second loan typically carries a higher rate than the first mortgage.

In this example, you avoid PMI on the first mortgage but take on a second loan with its own interest charges and potential fees. Whether that saves you money depends on the total cost of both loans compared with a single mortgage with PMI. We break down how to do that math below.

Types of piggyback mortgages

Not every piggyback loan is structured the same way. The second number tells you how much of the purchase price the second loan covers, and the third tells you your down payment. Here are the different options:

• 80-10-10: With this common piggyback mortgage structure, your first mortgage covers 80% of the purchase price, a second loan covers 10%, and your down payment covers the remaining 10%. This lets you avoid PMI on the first mortgage without saving a full 20% down payment.
• 80-15-5: This option shifts more of the balance onto the second loan so you need to put just 5% down. Compared with an 80-10-10, you contribute less upfront but borrow more through the second loan.
• 80-20: This approach covers the entire remaining 20% with a second loan, meaning you’re putting 0% down. This leaves you with the smallest equity cushion of these three options. If your home’s value drops, you could owe more on the two loans combined than the home is worth. Full 80-20 structures are less common than they were before the housing crash, and availability varies by lender.

Pro tip: Some lenders cap the combined loan-to-value (CLTV) ratio on a second lien at 90% or lower, which can make the 80-15-5 and especially the 80-20 harder to find than the 80-10-10.

Piggyback mortgage pros and cons

When deciding if a piggyback mortgage is right for you, weigh the potential benefits against the risks.

Piggyback loan requirements

To qualify for a piggyback loan, you’ll have to show you can afford both payments. Lenders will review those payments alongside your other debts when evaluating your application.

For the process itself, you can expect more documentation and coordination than if you were doing a single-loan closing, especially if two lenders are involved.

As with any loan, stable, verifiable income is important. And you’ll need to meet the income requirements for both loans.

Piggyback vs. PMI: how to find your break-even

Comparing the monthly PMI payment to the monthly second-loan payment can be misleading because the two costs behave differently over time.

First, it’s important to remember that PMI is temporary. On a conventional loan, you can generally request cancellation once your balance reaches 80% of the original value, and servicers must terminate it automatically when your balance is scheduled to reach 78% if you’re current. The second loan stays with you until it’s paid off.

To figure out the break-even math, compare the total interest and fees on both piggyback loans with the interest, fees, and PMI on a single mortgage over the same period. Your PMI disclosure form shows when your balance is scheduled to reach 80% of your home’s original value, when you can request cancellation.

Compare costs over the time you expect to keep the loans. Selling or refinancing sooner gives you less time to recover any extra upfront costs, while keeping the loans longer means accounting for when PMI ends and how long you’ll continue paying the second loan.

Another factor that could impact your decision is your credit profile. A strong score can help you earn a more competitive second-lien rate, while a weaker one can push the second loan’s cost above what PMI would have been. Your credit score can also affect your PMI cost, so compare quotes for both options.

Piggyback mortgages and the conforming loan limit

Beyond PMI, the other key reason why people use a piggyback loan is when the purchase price would push a single loan above the conforming limit. For 2026, that baseline limit is $832,750 for a one-unit property in most of the country, though it can rise to $1,249,125 in high-cost areas.

Say you’re buying a $1,000,000 home with 10% down. A single loan would be $900,000, which exceeds the baseline limit in most of the country and would generally be priced as a jumbo loan.

Because jumbo loans generally have higher interest rates and more stringent qualifications than conforming loans, there could be a mathematical benefit to using an 80-10-10 strategy instead in this scenario. An 80-10-10 strategy would keep your first mortgage at $800,000, below the conforming limit. However, whether that saves you money depends on the combined costs of both loans compared with a jumbo mortgage.

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Piggyback mortgage rates

An 80% LTV can help you qualify for a competitive rate on your first mortgage. The second loan typically carries a higher rate because the lender is taking on more risk.

HELOCs usually carry higher rates than first mortgages, and variable-rate HELOCs typically move with changes in the prime rate.

Where to find piggyback lenders

Not every lender offers piggyback financing, so you’ll need to shop around and ask directly whether a lender does simultaneous-close piggyback loans.

If your primary lender refers you to another lender for the second loan, confirm how they’ll coordinate the two loans to meet your closing date and avoid delays.

Risks

Using piggyback loans can be worthwhile for some borrowers, but you should be aware of the potential risks.

• Rate risk: If the second loan is a variable-rate HELOC, your payment can rise as prime rises, subject to the loan’s rate cap. Your agreement should disclose the maximum rate that applies.
• Overleveraging: With an 80-20 or another high-LTV structure, a drop in home values can put you underwater on two loans with little or no equity cushion.
• Subordination agreements: Refinancing your first mortgage later typically requires the second lender’s consent unless you pay off the second loan, and they’re not required to give it.
• Short time horizon: If you plan to move within a few years, any extra closing costs take time to recover, and you may sell before the piggyback beats PMI.

Alternatives to a piggyback mortgage

Consider all of your home financing options to see if a piggyback mortgage is the best move.

• Conventional with PMI: PMI is an extra monthly cost, but it’s not permanent. You can generally request cancellation at 80% of the original value, and servicers must terminate it automatically when your balance is scheduled to reach 78% if you’re current. Lender-paid PMI trades that monthly line item for a permanently higher rate.
• VA or USDA loans: Neither of these government-backed loans requires PMI, and both allow 0% down, making them worth comparing before you build out a piggyback structure. They have very specific eligibility requirements, however, and may charge other program fees.
• FHA loans: FHA loans allow down payments as low as 3.5% and may be an option for buyers with lower credit scores. However, they require mortgage insurance, so compare the total costs.
• Down payment assistance: If your goal is decreasing your out-of-pocket costs rather than avoiding PMI, state and local housing finance agency programs often pair a first mortgage with a second loan or grant that can cover part of your down payment and closing costs.

The takeaway

A piggyback can work well if you’re close to 20% down, have strong credit, and can land a competitively priced second loan. It can also be a smart strategy if it allows your first loan to stay within conforming limits. But whether it beats a single loan with PMI comes down to the break-even math. Be sure to factor in the rates, extra fees, and how long you plan to stay in the home compared with how long PMI would last.

Most importantly, approach the decision with clear eyes. Two loans can mean additional closing costs and more coordination, both upfront and if you refinance later. If you still have compelling reasons to go the piggyback route, work with lenders that specialize in those products to ensure a smoother process.

Frequently asked questions

Are piggyback loans still available?

Piggyback loans are still available, but options may be limited and not all lenders offer them. The most common type you may find is the 80-10-10 piggyback, which is a second loan for 10% of the purchase price. Other structures may be harder to find.

Is it hard to get a piggyback loan?

Getting a piggyback loan requires a similar underwriting process to a regular mortgage. But because it’s a second loan, posing more risk for the lender, there could be additional qualifications and documentation needed.

Is a piggyback loan better than paying PMI?

A piggyback loan may be a more favorable option than paying PMI, but it really depends on the borrower’s situation. It may suit buyers who are close to 20% down and have strong credit, but savings depend on the rates, fees, and how long they keep the loans. Running your numbers can help you figure out the break-even point.

Is a piggyback loan the same as down payment assistance?

A piggyback loan is different from down payment assistance, though the latter is sometimes offered via a second loan. Down payment assistance aims to make the purchase more affordable, while the goal of a piggyback loan is to help a borrower avoid PMI or meet conforming loan limits.