Piggyback Loan — Get Funding for Your Down Payment
With a piggyback loan, you take out a second mortgage alongside your primary mortgage to help fund your down payment. Having more for a down payment can make the purchase possible in the first place, qualify you for a lower interest rate, or eliminate PMI entirely. It's a powerful tool when the numbers need restructuring, and a broker who has done it before makes all the difference.
Talk to a broker about my optionsWant $0 down through a single loan? Check USDA eligibility or VA loans first — they're usually cheaper.
What is a piggyback loan?
The two loans close at the same time, but they're separate agreements — often with separate lenders. The first mortgage covers the bulk of the purchase. The second, smaller loan (the piggyback) sits behind it and funds part or all of your down payment. Each has its own rate, term, and payment.
That second lender has to agree to be in second position, which means if you ever default, they only get paid after the first lender is made whole. Because of that risk, piggyback loans typically carry a higher rate than the first — and that tradeoff is exactly what needs to pencil out before it's worth doing.
Coordinating two lenders on one closing is where things get complicated. Not every lender will play second — and the ones who will don't always advertise it. A broker who has run these deals before knows who to call and how to structure it so both sides close together.
The two problems it solves
Avoid PMI
Keep the first loan at 80% LTV — no PMI required. The second loan covers the gap between 80% and your actual down payment.
Cover the down payment
Use the second loan to fund some or all of the down payment — reaching low or zero cash out of pocket without USDA/VA requirements.
Common Piggyback Loan Structures
| Structure | First mortgage | Second (piggyback) | Cash down | Best for |
|---|---|---|---|---|
| 80-10-10— Most common | 80% | 10% | 10% cash | Avoid PMI on the first loan while keeping a manageable down payment. |
| 80-15-5 | 80% | 15% | 5% cash | Lower cash requirement than 80-10-10 while still avoiding PMI. |
| 80-20— $0 down | 80% | 20% | $0 | True zero-down purchase. Harder to find post-2008 — requires strong credit and two qualifying lenders. |
Why this deal takes a broker
A piggyback loan often requires two separate lenders closing on the same transaction. An independent broker works across a wholesale lender network — they can place both loans, find a second-lien lender willing to sit behind someone else's first mortgage, and manage the coordination between them. A single-lender loan officer simply doesn't have that reach.
What a single lender does
- Sells only their own products — whatever that institution offers
- May offer a second mortgage product, but only from their own portfolio
- Cannot place the second loan with a different lender
- Won't coordinate terms between their loan and another lender's
- Unlikely to explain options they don't sell
What a broker does
- Shops both the first and second loan across their lender network
- Knows which second-lien lenders specifically do piggyback loans on purchase transactions
- Coordinates disclosures — both lenders must know about each other's loan and underwrite accordingly
- Structures the deal so the first lender's guidelines allow the second lien
- Can tell you upfront if USDA, VA, FHA, or a piggyback is actually the right path for your situation
Both lenders are required by law to know about each other — this isn't a workaround, it's a standard two-loan purchase structure. But making it happen requires someone who works with multiple lenders simultaneously, which is exactly what a broker does.
Pros and Cons of Piggyback Loans
Advantages
- Avoid PMI on the first mortgage entirely — the first loan stays at or below 80% LTV
- Reach $0 or low down payment when you don't qualify for USDA or VA
- No location restrictions — works anywhere, any property type
- No income limits — unlike USDA, anyone with qualifying credit can pursue this
- Second loan can sometimes be paid off faster, reducing total interest cost
Considerations
- Second loan carries its own interest rate — typically higher than the first, often a HELOC rate
- Two separate loan payments and two sets of closing costs
- Both loans require separate qualification — credit, income, DTI scrutinized twice
- If home value drops, you're underwater on two loans, not one
- Harder to refinance later — second lienholder must agree to subordinate
- Less common post-2008 — fewer lenders offer piggyback seconds, especially for $0 down structures
Other Paths to $0 or Low Down Payment
USDA and VA are usually the cheaper $0-down path — single loan, lower fees, no second mortgage rate. If you don't qualify for either, a piggyback is worth understanding as an alternative.
USDA — $0 down
Best option if you qualify. Rural and suburban properties, income limits by county. Single loan, low fees, no PMI.
Check USDA eligibilityVA — $0 down
Best option for veterans and service members. No down payment, no PMI, no income limits. Requires military service.
See VA loansFHA — 3.5% down
Flexible credit, 3.5% down. Down payment can come from gift funds or assistance programs. Has MIP instead of PMI.
See FHA loansTalk to a Broker About Your Options
Takes about 2 minutes · No credit check · No obligation
A broker can tell you whether USDA, VA, FHA, a piggyback, or some combination makes the most sense for your situation — and then coordinate the lenders to make whichever structure you choose actually happen.
- NMLS-licensed lenders
- Secure & confidential
- No credit check
How it works
- 1Enter your info — takes about 2 minutes
- 2Get matched with brokers who coordinate piggyback loan structures
- 3Compare first and second loan options side by side
Piggyback Loans Need a Broker Who Knows the Structure
A bank sells what it has. Coordinating a first and second mortgage from two different lenders — with full disclosure and aligned underwriting — is exactly what a mortgage broker does. Connect with one who can run USDA, VA, FHA, and piggyback scenarios for your situation and tell you which actually costs less.
Talk to a broker about my options
NMLS-licensed lenders Fast approval No credit impact
Powered by Mortgage Research Center, NMLS #1907 — Trusted since 2002