piggyback loan

Piggyback Loan

A loan for a portion of the value of a home over and above the traditional mortgage. In general, one must have a 20% down payment to purchase a home and one finances the remaining 80%. A piggyback loan allows one to borrow at least a portion of the remaining 20% (though at a higher interest rate than the remainder of the mortgage). A piggyback loan is an alternative to private mortgage insurance. It may allow more people to purchase their own homes.

piggyback loan

A combination of a construction loan and a permanent loan commitment.

References in periodicals archive ?
In 2006, almost 30% of all New York City homebuyers taking out a first mortgage simultaneously took out a second lien, or piggyback loan.
In the case of younger boomers, a planner needs to help clients decide whether to take out a piggyback loan to avoid paying private mortgage insurance, according to Pearson.
If you have a piggyback loan, you are going to get hit, again, with a higher capital requirement at the bank and a higher interest rate.
In the other alternative, the Piggyback loan, the SBA lender will make a second position loan and arrange for a non-SBA lender to make the remainder of the loan in a secured first position.
Lenders were clearly aware of the piggyback loan problem by the third quarter, when origination volume for securitized closed-end seconds dropped like a rock to $1.
In the United States, if a borrower can't or doesn't want to make a 20 percent down payment, he or she generally has two choices: a piggyback loan (taking out a second mortgage to cover the difference between the 80 percent first mortgage and the down payment) or mortgage insurance.
Figure 3 compares a piggyback loan with an IO loan and a 30-year fixed-rate mortgage (FRM), both with mortgage insurance (MI), showing what would happen to each under a scenario of a two percentage point increase in the prime rate--not unlikely by any historical indicator.