A piggyback loan is a second loan taken alongside the first mortgage to help finance the purchase without using a single larger first-lien loan.
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.
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.
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.