Buying a home is one of the biggest financial moves you’ll make—and for some borrowers, traditional loan options don’t always fit the budget or homeownership goals.
That’s where a piggyback loan comes in. This flexible financing strategy combines two loans to help you reduce upfront costs, avoid mortgage insurance, or stay within conforming loan limits.Wondering if a piggyback loan solution might work for you?
Let’s walk through how piggyback loans work, who benefits from them, and how to explore this option with GO Mortgage.
Finance your home purchase with GO Mortgage.What is a piggyback loan?
A piggyback loan is a home financing method that combines two separate loans to cover the total purchase price of a home.
The second loan “piggybacks” on the first, allowing you to borrow more without taking out a jumbo mortgage or paying private mortgage insurance (PMI).
This structure is especially useful for buyers who:
- Don’t have a full 20% down payment
- Want to avoid mortgage insurance
- Need to keep their first mortgage within conforming loan limits
Piggyback loans are often referred to as 80-10-10 loans, but other variations, like 75-15-10—are also common depending on your financial situation.
How does a piggyback loan work?
Here’s a breakdown of the common 80-10-10 piggyback loan:
- 80% of the home’s purchase price is financed through a first mortgage
- 10% is covered by a second mortgage or Home Equity Line of Credit (HELOC)
- 10% is paid by you as a down payment
This layered loan setup helps you avoid crossing into jumbo loan territory or paying PMI, both of which can increase your monthly payment.
The first loan is typically a 15- or 30-year fixed-rate conforming mortgage, while the second may be a fixed-rate loan or a HELOC.
What are the benefits of a piggyback loan?
Piggyback loans come with several distinct advantages, particularly for homebuyers who are financially stable but need more flexibility:
- Avoid PMI: If you’re putting down less than 20%, most lenders will require private mortgage insurance. A piggyback structure allows you to sidestep this extra cost.
- Stay within conforming limits: By splitting the mortgage, your primary loan can remain under the conforming loan threshold, often resulting in better interest rates.
- Lower down payment: You can put down as little as 10% and still afford a more expensive home.
- Pay off the second loan early: If you receive a financial windfall, like selling your current home, you can pay off the second mortgage without refinancing the entire loan.
Who should consider a piggyback loan?
This option works well for borrowers who:
- Are purchasing a higher-priced home but want to avoid a jumbo loan
- Can afford a 10% down payment but want to avoid PMI
- Expect future income or funds to pay off the second loan early
- Want to structure their mortgage for maximum tax and interest efficiency (consult a tax advisor)
Piggyback loans are available to qualified buyers who meet lending criteria for both the primary and secondary mortgages.
If your credit score is strong and you’re looking for long-term savings or a way to stretch your budget, it’s worth exploring.
Common homebuying scenarios where piggyback loans help
Let’s look at a few examples that show how piggyback loans can solve common homebuying challenges:
Scenario 1: You need to stretch your budget
You originally planned to buy a home within a specific price range using a 20% down payment.
However, after touring homes, you realize that you need to spend more to get the space or location you truly want. Now, you only have 10% of the new price.
A piggyback loan helps bridge the gap without taking on mortgage insurance.
Scenario 2: You want to avoid a jumbo loan
You’ve found a home just above the conforming loan limit, which would normally push you into jumbo mortgage territory, often with stricter requirements and higher rates.
Instead, a piggyback loan lets you finance the conforming portion as a first mortgage, then take a second mortgage to cover the difference. This avoids the jumbo category entirely.
Scenario 3: You want to skip PMI
You have good credit and enough for a 10% down payment, but you don’t want to add PMI to your monthly expenses.
Using a piggyback loan, you avoid PMI by financing 80% with the primary mortgage, 10% with a secondary mortgage, and 10% down.
In each of these cases, a piggyback loan allows for greater flexibility and lower total monthly costs without requiring a larger upfront investment.
How to get started with a piggyback loan
If you think this strategy could be the right fit for your situation, here’s how to begin:
- Speak with a GO Mortgage advisor: We’ll evaluate your finances, walk through your homebuying goals, and determine whether a piggyback loan is right for you.
- Get preapproved: Understanding your budget and loan eligibility is key before house hunting. Use our preapproval tool to begin.
- Explore loan options: We’ll help you compare a piggyback structure with other popular options, such as FHA, VA, or conventional loans.
- Start your search with confidence: With your financing strategy in place, you’ll be ready to shop smart and make competitive offers.
Wondering if a piggyback loan is right for your homebuying goals? Start your application now and connect with our experienced team.
Explore more mortgage options
- Loan comparisons
- Steps for buying a house
- Preapproved to buy a home
- Consumer Financial Protection Bureau – Piggyback Loans
Final thoughts: Is a piggyback loan right for you?
Piggyback loans are a smart solution for buyers who want to keep costs low, stay within conforming limits, or avoid PMI, without compromising on their dream home.
With flexible options and the ability to structure your financing to fit your needs, this approach offers real benefits in today’s competitive housing market.
Whether you’re upsizing, relocating, or making your first big purchase, GO Mortgage is here to help you explore every smart financing option available.
Talk to a GO Mortgage team member today and see how a piggyback loan might help you unlock the door to homeownership.