Definition: In most instances, piggyback loans represent 100% mortgage financing, meaning the buyer has chosen to not put down any money but to finance the entire purchase price. A typical piggyback situation is an 80% first mortgage and a 20% second mortgage. If the buyer put down 5%, the first mortgage would still be 80%, and the second mortgage balance would be 15%.
Also Known As: Combo or combination loans
Alternate Spellings: Piggy-back loans
Common Misspellings: Piggie back loans
Examples:
To reduce his monthly payments, Dweezil financed an 80% first mortgage with an adjustable interest rate and he obtained a 20% second mortgage that was payable interest only. Let's hope that Dweezil doesn't lose his job any time soon.