Second loan paired with a first mortgage to help finance the purchase.
A piggyback loan is a second loan taken alongside the first mortgage to help finance a home purchase without relying on one larger first-lien loan.
Piggyback loan matters because it changes the way a borrower structures leverage. Instead of using one first mortgage for almost the full purchase amount, the borrower may combine a first mortgage, a second loan, and a down payment.
It also matters because borrowers often use piggyback structures to manage Private Mortgage Insurance (PMI), cash requirements, or loan-size strategy. That can help in some cases, but it also means the borrower is carrying more than one obligation at once.
Borrowers encounter piggyback-loan planning while shopping for financing, comparing down-payment options, and reviewing whether a two-loan structure works better than one larger mortgage.
The term becomes especially practical when the lender models both Loan-to-Value Ratio (LTV) and Combined Loan-to-Value Ratio (CLTV) instead of looking only at the first mortgage.
| Piece of the structure | Example in an 80-10-10 setup |
|---|---|
| First mortgage | 80% |
| Piggyback second loan | 10% |
| Borrower down payment | 10% |
A buyer uses an 80-10-10 structure: an 80 percent first mortgage, a 10 percent second loan, and a 10 percent down payment. That second loan is the piggyback piece and usually creates a Junior Lien behind the first mortgage.
Piggyback loan differs from Second Mortgage because second mortgage is the broader structural category, while piggyback loan usually describes the second-lien piece used at purchase alongside the first mortgage.
It also differs from Home Equity Line of Credit (HELOC) because a HELOC is a revolving credit product, while a piggyback loan is the purchase-financing strategy itself and may or may not use a HELOC structure for the second lien.
It also differs from Lien Priority. Piggyback loan describes the purchase-financing structure, while lien priority explains where the first and second loans stand against the property.