Piggyback Loan and Payment Calculator

A piggyback loan calculator helps you estimate your monthly payments when using two mortgages to finance a home purchase, often to avoid private mortgage insurance (PMI). It lets you compare the cost of splitting your home loan into a first and second mortgage versus taking out a single loan with PMI.

How to use the piggyback loan calculator

A piggyback loan calculator breaks down your total home financing into two parts: a first mortgage and a second mortgage. Here’s how to use it:

→ Enter the home’s purchase price: Start by entering your home's purchase price or sales price in the designated field.
→ Input your down payment: This is how much you’re willing to pay upfront, often 5%, 10%, or 20%.
→ Enter the interest rates for both mortgages: The first mortgage usually has a lower interest rate, while the second may carry a higher rate.
→ Choose the loan term: Specify the loan terms for both mortgages.
→ Add your estimated property taxes and homeowners insurance: These help estimate your full monthly housing cost.

The calculator will show you your estimated monthly mortgage payment for both mortgages and your combined monthly payment. It also has preset piggyback structures you can play around with, including: 80-10-10, 80-15-5, and 80-20.

Some piggyback loan calculators include options for biweekly payments or interest-only periods, letting you compare different payment scenarios.

What is a piggyback loan?

A piggyback loan, also called a combo or blended-rate loan, combines two mortgages to purchase a home. The first mortgage covers 80% of the home’s value, and the second covers an additional portion, such as 10% or 15%. You cover the rest of the down payment.

The purpose of a piggyback loan is to allow borrowers with small down payments to borrow additional money to qualify for a mortgage without paying PMI. PMI adds an extra monthly cost without building equity, so many buyers use piggyback loans to avoid it.

Piggyback loans apply exclusively to conventional mortgages backed by Fannie Mae or Freddie Mac, not government-backed mortgages like FHA, VA, and USDA loans. They’re common among borrowers with strong credit scores who want to minimize upfront costs or keep their loan amount within conforming limits.

Common piggyback structures explained

Piggyback loans come in three different structures. Here’s how they work:

80-10-10 loan 

The 80-10-10 piggyback loan is the most popular structure. The first mortgage finances 80% of the home’s purchase price, the second mortgage covers 10%, and you put down the remaining 10%.

For example, on a $400,000 home, you’d secure a $320,000 first mortgage, take a $40,000 second mortgage, and put down $40,000.

80-15-5 loan 

With the 80-15-5 piggyback loan structure, the first mortgage still covers 80% of the property’s sale price. The second mortgage finances 15%, and you put down 5%.

Let’s say you’re buying a $400,000 home. Your first mortgage will be $320,000, and your second mortgage will be $60,000. You’ll need to put $20,000 down.

80-20 loan

The 80-20 piggyback loan eliminates the down payment requirement entirely. Your first mortgage covers 80%, and the second mortgage funds the remaining 20%. 80-20 piggyback loans were popular before the 2008 housing crisis, but are now rare. Still, some lenders may offer them to highly qualified buyers.

How a piggyback loan works vs. a traditional mortgage

With a piggyback loan, you secure two separate loans at closing. The first mortgage is the primary loan, which covers 80% of the property’s purchase price. The second mortgage, often a home equity loan or home equity line of credit (HELOC), covers an additional 10%-20%. Each loan has its own interest rate, repayment term, and monthly payment.[1]

While a piggyback loan helps avoid PMI, your second mortgage carries a higher interest rate than your first. This means you're paying extra in interest instead of insurance premiums.

In a traditional mortgage, you borrow one loan and pay PMI if your down payment is below 20%. The PMI cost can range from 0.3% to 2% of the total loan amount. However, PMI varies from one person to another based on factors like loan amount, credit score, loan-to-value (LTV) ratio, and down payment amount.

Both Fannie Mae and Freddie Mac allow piggyback loans under certain limits, but borrowers must still meet credit and debt-to-income (DTI) standards.

Most lenders require stronger credit profiles for piggyback loans than traditional single mortgages because you're managing two debt obligations at the same time.

Piggyback loan vs. PMI

Piggyback loans might not always be a better option than PMI. You'll want to consider each option's monthly cost, flexibility, interest, and risk.

Piggyback loan and PMI, compared

→ Piggyback: Two mortgage payments with a higher interest rate on the second mortgage
→ PMI: One mortgage payment includes PMI until you build enough equity to cancel it
→ Piggyback: You can pay off the second mortgage at any time
→ PMI: You must build 20% equity before you can cancel PMI
→ Piggyback: Interest will potentially be higher over the life of loan
→ PMI: Lower interest rates for mortgage loan, but added cost of PMI premiums
→ Piggyback: Two liens might make your mortgage difficult to refinance
→ PMI: Easy to refinance at any time

If your credit profile is good and you plan to sell your house soon or refinance, a single loan with PMI might be cheaper than a piggyback loan. Use a piggyback loan calculator to compare total monthly payments.

Pros and cons of piggyback loans

Piggyback loans have several advantages, but they also include some downsides.

The main advantage of piggyback loans is avoiding PMI. This can help you save thousands of dollars over the life of the loan. This also means you can qualify for a more expensive home than you could with PMI. Because PMI increases your debt-to-income ratio, eliminating it means more borrowing power.

Piggyback structures can help you stay under conforming loan limits set by Fannie Mae and Freddie Mac. Plus, they tend to have more lenient credit requirements and better interest rates than jumbo loans.

On the flip side, two separate mortgages mean more paperwork, two closing costs and monthly payments to manage. Defaulting on either mortgage can lead to foreclosure.

The second mortgage almost always carries a higher interest rate than your first mortgage. The rate difference can cost you thousands over the loan's life, potentially exceeding what you would have paid in PMI premiums.

Each mortgage comes with its closing costs. Even if the second mortgage is small, you’re still responsible for covering 2% to 6% of the loan amount.

Refinancing might be more difficult with two mortgages, especially if they’re through two different lenders.

Who qualifies for a piggyback loan? 

Piggyback loans are best suited for borrowers with strong financial profiles. To qualify, you must meet the following requirements:

→ Credit score: Most lenders require a credit score of 700 and higher. However, some allow scores as low as 680, provided that you have strong compensating factors.
→ Debt-to-income ratio: Your debt-to-income ratio must accommodate both mortgage payments plus all other debts. Most lenders cap DTI at 43%, but aim for a DTI of 36% or less for better rates and terms.
→ Down payment: You must meet the down payment minimums, depending on the piggyback structure you choose. The 80-10-10 requires 10% down, while the 80-15-5 needs just 5%.

Is it hard to get a piggyback loan? It's definitely harder than qualifying for a standard mortgage with PMI. You'll face more scrutiny of your credit history, employment stability, and cash reserves.

When a piggyback loan makes sense (and when it doesn’t) 

A piggyback loan isn’t for everyone. Knowing scenarios when it makes sense and when it doesn’t can help you make an informed decision.

When it makes sense:

→ To avoid mortgage insurance: A piggyback loan can help you avoid PMI if you’re putting down less than 20% on a conventional loan.
→ To avoid a jumbo loan: You can keep your first mortgage within conforming limits while financing the rest with a second loan.
→ Strong credit but small down payment savings: If you have excellent credit but can only put down 5%-10%, a piggyback loan might be a good idea.
→ Long-term ownership: You plan to keep the home for many years.

When it doesn’t make sense:

→ Short-term ownership: If you plan to sell the home or refinance in a few years, securing a piggyback loan may not be ideal.
→ Unstable income: Managing two loans adds financial pressure, especially if your income is unstable.

Traditional mortgages with PMI work better if you expect rapid property appreciation. In hot markets where home values go up annually, your PMI could disappear within a few years through appreciation alone, making it far cheaper than years of high-interest second mortgage payments.

Decision checklist

✅ Credit score above 720
✅ Less than 10% down but solid income
✅ Planning to stay 7+ years
❌ Rates on second mortgages 2%+ higher than first? PMI might be cheaper.
❌ In a rapidly appreciating market? PMI could disappear fast.

Next steps: Compare lenders and get personalized estimates

Now that you understand piggyback loans, use the calculator to model your specific scenario with real numbers. Then get personalized rate quotes from at least three lenders who offer piggyback.

Remember that calculator estimates use average rates and assumptions. Your actual rates will vary based on credit score, loan amount, income, property type, and market conditions.

FAQ