80-10-10 means: 80% first mortgage, 10% second mortgage, 10% down payment. The combined LTV is 90%, so no PMI on the first mortgage. The second mortgage typically has a higher interest rate than the first. See What Is LTV.

80-15-5 means: 80% first mortgage, 15% second mortgage, 5% down payment. The second mortgage covers the gap so you avoid PMI. You have a smaller down payment but a larger second mortgage. Compare total mortgage payment and closing costs.

When does a piggyback make sense?

When the cost of the second mortgage (rate + fees) is less than PMI over the time you expect to have it. Compare total costs. Piggybacks can make sense if you have strong credit and expect to pay down the second or refinance soon. See What Is PMI and What Is DTI.

Does a piggyback affect my Loan Estimate or closing costs?

Yes. You receive a Loan Estimate (TRID) for each loan—or a combined disclosure. Your closing costs include fees for both the first and second mortgage. Two loans mean two sets of origination fees, possibly two appraisals. Compare the total to a single loan with PMI.

What is the interest rate on the second mortgage?

Second mortgages typically have higher interest rates than first mortgages because they are riskier for the lender. The rate may be fixed or adjustable. Your Loan Estimate shows the rate and mortgage payment for each loan. See What Is Interest Rate.

What Is a Piggyback Loan?

Disclaimer: This website provides general mortgage and financial information for educational purposes only. It does not constitute financial, legal, or mortgage advice. Housentia is not a licensed mortgage broker, lender, or loan originator.

This content is provided for general educational purposes only and does not constitute financial, legal, or mortgage advice.

Introduction

A piggyback loan combines a first mortgage with a second mortgage so you can put down less than 20% and avoid PMI (private mortgage insurance). Common structures: 80-10-10 (80% first, 10% second, 10% down) or 80-15-5. You have two loan amounts, two interest rates, and two mortgage payments—but no PMI on the first loan.

Your Loan Estimate (TRID) may show both loans. First-time homebuyers with strong credit and limited down payment may consider a piggyback. See What Is a Second Mortgage, What Is PMI, and What Is LTV.

What This Means

With a conventional loan and less than 20% down, you typically pay PMI. A piggyback uses a second mortgage to cover part of the gap. The first mortgage stays at 80% LTV—no PMI. The second mortgage has a higher interest rate and its own mortgage payment. Your total closing costs include fees for both loans.

Underwriting evaluates both loans. Your DTI includes both payments. Compare the total cost (first + second payment + closing costs) to a single loan with PMI. See What Is DTI and What Is Amortization.

How It Works: Piggyback Structures

Structure	First Mortgage	Second Mortgage	Down Payment
80-10-10	80% LTV; no PMI	10%	10%
80-15-5	80% LTV; no PMI	15%	5%

Second mortgage typically has higher interest rate. Your Loan Estimate (TRID) shows both loans.

How It Works

You apply for both loans—often through the same lender or a lender that offers piggyback programs. The first mortgage is a conventional loan at 80% LTV. The second mortgage (home equity loan or HELOC used as a second) covers 10% or 15%. Your down payment covers the rest. Because the first loan is at 80% LTV, no PMI is required.

The second mortgage usually has a higher interest rate and may have a shorter term. You make two mortgage payments each month. Underwriting evaluates your DTI with both payments. Your Loan Estimate (TRID) and Closing Disclosure show the loan amount, rate, payment, and closing costs for each. See What Is APR, What Is Mortgage Principal, and Conventional Loan.

Realistic Example Scenario

Alex buys a $400,000 home with 80-10-10. First mortgage: $320,000 (80%) at 6.5%, $2,022 mortgage payment (P&I), no PMI. Second mortgage: $40,000 (10%) at 8.5%, $327 payment. Down payment: $40,000 (10%). Total payment: $2,349. Closing costs for both loans.

Compare to a single $360,000 loan (90% LTV) with PMI: payment might be similar or higher depending on PMI cost. The example is illustrative. See What Is Interest Rate and Mortgage Closing Cost Breakdown.

Key Takeaway

A piggyback loan = first mortgage (80% LTV) + second mortgage (10% or 15%) + down payment. No PMI on the first. You have two loan amounts, two interest rates, two mortgage payments. The second typically has a higher rate. Compare total cost (payments + closing costs) to a single loan with PMI. Your Loan Estimate (TRID) shows both.

Why This Matters for Homebuyers

First-time buyers with strong credit but limited savings may want to avoid PMI. A piggyback can achieve that with 10% or 5% down. The trade-off: two loans, two payments, and typically higher closing costs. The second mortgage's interest rate is usually higher. Compare the total cost over time to a single loan with PMI—especially if you plan to pay down the second or refinance when you reach 80% LTV.

Your Loan Estimate (TRID) lets you compare. You receive it within 3 business days of application. It shows the loan amount, interest rate, mortgage payment, and closing costs for each loan. See Loan Estimate Explained and FHA vs Conventional Loan.

Pros and Cons of Piggyback Loans

Benefits

No PMI on the first mortgage
Lower down payment (10% or 5%)
May pay off second early to reduce payment
First mortgage at 80% LTV

Considerations

Two loans, two payments, two sets of fees
Second mortgage has higher rate
Higher closing costs than single loan
DTI must support both payments

Common Mistakes

Assuming piggyback is always cheaper than PMI: Compare total cost. The second mortgage's higher rate and fees may exceed PMI—especially if you keep the loan long-term. Run the numbers for your scenario.
Ignoring closing costs for both loans: Two loans mean two sets of origination fees, possibly two appraisals. Your Loan Estimate shows the total. Compare to a single loan with PMI.
Not budgeting for two mortgage payments: You owe two payments each month. Underwriting will include both in your DTI. Ensure you can afford both. See What Is DTI.
Assuming you can remove the second easily: Paying down the second or refinancing requires equity, a new appraisal, and possibly new closing costs. Plan for the full term of both loans.
Confusing 80-10-10 with 80-15-5: 80-10-10 requires 10% down. 80-15-5 requires 5% down but a larger second mortgage (15%). The second in 80-15-5 typically has a higher rate or shorter term.
Not comparing Loan Estimates: Get a Loan Estimate for a piggyback and for a single loan with PMI. Compare interest rate, mortgage payment, closing costs, and APR. TRID makes comparison easier. See Loan Estimate Explained.

Frequently Asked Questions

What is a piggyback loan?: A piggyback loan combines a first mortgage (e.g., 80% LTV) with a second mortgage (e.g., 10% or 15%) so you can avoid PMI while putting down less than 20%. You have two loan amounts, two interest rates, and two mortgage payments. Your Loan Estimate (TRID) may show both loans.
What is 80-10-10?: 80-10-10 means: 80% first mortgage, 10% second mortgage, 10% down payment. The combined LTV is 90%, so no PMI on the first mortgage. The second mortgage typically has a higher interest rate than the first. See What Is LTV.
What is 80-15-5?: 80-15-5 means: 80% first mortgage, 15% second mortgage, 5% down payment. The second mortgage covers the gap so you avoid PMI. You have a smaller down payment but a larger second mortgage. Compare total mortgage payment and closing costs.
When does a piggyback make sense?: When the cost of the second mortgage (rate + fees) is less than PMI over the time you expect to have it. Compare total costs. Piggybacks can make sense if you have strong credit and expect to pay down the second or refinance soon. See What Is PMI and What Is DTI.
Does a piggyback affect my Loan Estimate or closing costs?: Yes. You receive a Loan Estimate (TRID) for each loan—or a combined disclosure. Your closing costs include fees for both the first and second mortgage. Two loans mean two sets of origination fees, possibly two appraisals. Compare the total to a single loan with PMI.
What is the interest rate on the second mortgage?: Second mortgages typically have higher interest rates than first mortgages because they are riskier for the lender. The rate may be fixed or adjustable. Your Loan Estimate shows the rate and mortgage payment for each loan. See What Is Interest Rate.

Sources

Consumer Financial Protection Bureau (CFPB) – Loan Estimate and Closing Disclosure (TRID)
Consumer Financial Protection Bureau (CFPB) – Truth in Lending Act (TILA)
Consumer Financial Protection Bureau (CFPB) – Know before you owe: closing costs
Fannie Mae – Selling Guide (second mortgage and piggyback guidelines)
Freddie Mac – Single-Family Seller/Servicer Guide (second liens)

Educational Disclaimer