Piggyback Loan vs PMI
A **piggyback** (80-10-10 structure) combines a first mortgage at 80% LTV with a second loan for part of the down payment, avoiding **PMI**. PMI is simpler to originate but adds monthly cost until LTV drops.
Step by step
1. Price both payments
First + second lien vs first + PMI at the same purchase price.
2. Check second-lien rate
Second mortgages often carry higher APR and balloon features.
3. Plan refinance
Paying down the second or refinancing into one loan changes the math.
Piggyback vs PMI
Piggybacks help strong credit buyers; PMI is more common for first-time buyers.
- Piggyback: No PMI; two payments; tougher approval in high-rate environments.
- PMI: One payment; cancellable at ~80% LTV on conventional loans.
Use our calculators
Common mistakes
- Ignoring second-lien reset risk
- Assuming PMI lasts the full loan term
FAQ
Is piggyback always cheaper?
Not if the second lien rate is high—run both scenarios.