Reviewed by the Editorial Team · Updated July 10, 2026 · 6 min read
A piggyback loan pairs a first mortgage with a second loan, usually a HELOC or fixed second, so you avoid PMI without saving a full 20% down. The classic version is an 80/10/10: 80% first mortgage, 10% second, 10% down.
Key takeaways
A piggyback loan pairs a first mortgage with a second loan, most often structured 80/10/10, to avoid PMI without a full 20% down.
The second loan, typically a HELOC or fixed loan, carries a higher and often variable rate that adds real cost over time.
Qualifying requires strong credit on both loans at once, so it suits well-qualified buyers more than those with thin credit.
Keeping the first mortgage under the jumbo threshold is a common reason buyers choose this structure over one larger loan.
Common structure
80/10/10 (also 80/15/5, 75/15/10)
Min. down payment
5-10%, paired with the second loan
Key cost
Second loan's higher, often variable rate
Best for
Buyers with good credit who want to skip PMI
Today's 30-year fixed rate6.49%avg · Freddie Mac PMMS · as of Jul 9, 2026
Principal & interest only, 30-year term at 6.49%. Taxes, insurance and any mortgage insurance are extra. See today's rates →
How an 80/10/10 loan works
A piggyback loan splits your financing into two pieces closed at the same time. The first mortgage covers 80% of the price, staying at or under the conforming loan limit so it prices like an ordinary conventional loan.
80/10/10: 80% first mortgage, 10% second, 10% down
Both loans close together, so the lender coordinating the piggyback needs to underwrite you for the combined payment, not just the first mortgage alone.
What the second loan costs you
The upside is real: no PMI, a first mortgage that may stay conforming instead of tipping into jumbo territory, and a lower effective down payment than 20%.
The downside sits in the second loan. Its rate runs higher than the first mortgage and is often variable if it's a HELOC, so your combined payment can move even though the first loan stays fixed.
THE TRADE-OFF
PMI eventually cancels; the piggyback's second-loan rate doesn't shrink on its own. Compare the total cost of both structures over your expected time in the home before choosing.
Who a piggyback loan fits
Piggybacks suit borrowers with strong enough credit to qualify for two loans at once and a clear reason to avoid PMI or a jumbo loan.
Good-to-strong credit, since two lenders underwrite you
A home price that would otherwise push the first loan into jumbo territory
Wants to avoid PMI without waiting to save 20% down
Comfortable managing two payments and two closings
Skip it if refinancing flexibility matters most — untangling two liens later is more work than refinancing a single mortgage with PMI.
Piggyback Loan (80/10/10): pros and cons
Pros
Avoids PMI without a full 20% down
Can keep the first loan under jumbo limits
Second loan may carry a lower closing cost
Two loans mean two negotiable rates/terms
Cons
Two monthly payments and two closings
Second loan usually carries a higher, often variable rate
Qualifying requires strong credit on both loans
Harder to find lenders who still offer the structure
Piggyback loan vs. just paying PMI
A piggyback loan usually wins when the second loan's rate is lower than what PMI would cost over the time you'd carry it, and you plan to pay down or refinance the second loan quickly. If you'll keep low equity for years, PMI — which cancels automatically once you reach 20-22% equity — can end up cheaper.
Requirements at a glance
Good-to-strong credit score, since two loans are underwritten together
Combined down payment plus second-loan structure covering the gap to 100%
Debt-to-income calculated against both payments together
First mortgage typically sized to stay within the conforming loan limit
Two closings coordinated, often with two different lenders
A piggyback loan pairs a first mortgage with a second loan, usually a HELOC or fixed second, closed at the same time as the purchase.
It lets you avoid PMI or a jumbo loan without putting 20% down, at the cost of a second, pricier payment.
How does an 80/10/10 loan work?
The first mortgage covers 80% of the price, a second loan covers 10%, and you put down the remaining 10%. Both close together, so you're underwritten for the combined payment, not just the first mortgage.
Can a piggyback loan help me avoid PMI?
Yes — that's its main draw. Because the first mortgage stays at or under 80% loan-to-value, it doesn't trigger PMI, though the second loan's own rate is typically higher than PMI would cost.
Is a piggyback loan a good idea?
It can be, if avoiding PMI or a jumbo loan saves you more than the second loan's higher rate costs.
Piggyback loans work best for borrowers with strong credit and a plan to pay off or refinance the second loan quickly; otherwise the added payment and rate risk can outweigh the PMI savings.
What's one reason a borrower may choose a piggyback or split loan?
html">conventional loan without saving a full 20% down payment. Piggyback loans are also used to keep the first mortgage under conforming loan limits, avoiding the stricter underwriting and higher rates that come with a jumbo loan.
What credit score do you need for a piggyback loan?
You'll generally need stronger credit than a single-loan FHA purchase, since two lenders are underwriting two separate loans.
Both the first mortgage and the second-lien lender set their own minimums, and the second loan's lender typically wants a well-qualified borrower with low existing debt.
Are there piggyback loan structures besides 80/10/10?
Yes — 80/15/5 (15% second loan, 5% down) and 80/20 (no down payment, 20% second loan) are common variations, adjusted to fit how much cash a borrower has for closing.
The first mortgage typically stays at 80% in each version to avoid jumbo pricing or PMI.
This guide is general information, not a lending decision. Program rules and dollar limits change — verify current figures with a licensed lender and confirm licensing at NMLS Consumer Access. See all loan types.
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