Buying a home can be complicated enough without navigating jumbo loan requirements. In 2025, the base conforming loan limit across most of the U.S. is $806,500. In higher-cost areas like Los Angeles, San Francisco, and parts of New York, the limit stretches up to $1,209,750.
When your mortgage exceeds these limits, you typically fall into “jumbo loan” territory — and that can mean stricter underwriting, higher interest rates, and bigger down payment requirements.
One creative strategy to avoid taking on a jumbo loan is by using a piggyback loan. Should you use a piggyback loan to avoid a Jumbo mortgage?
In this post, we’ll break down:
- What a piggyback loan is
- How it can help you avoid a jumbo mortgage
- Common piggyback structures (80/10/10, 80/15/5, etc.)
- Pros and cons
- Who should (and shouldn’t) use this strategy
- Helpful graphics to visualize the options
Let’s dive in!
What Is a Piggyback Loan?
A piggyback loan involves taking out two loans simultaneously when purchasing a home:
- Primary mortgage: Covers a large portion (usually 80%) of the home’s purchase price.
- Second mortgage (“piggyback”): Covers part of the remaining balance, often 10%-15%.
The remaining percentage is your down payment.
Goal: Stay under the conforming loan limit to access better interest rates and easier loan approval standards.
Example:
- Purchase price: $1,000,000
- 80% first mortgage: $800,000
- 10% second mortgage (piggyback): $100,000
- 10% down payment: $100,000
Because the first mortgage is $800,000 — below the 2025 conforming limit of $806,500 — you avoid needing a jumbo loan!
Common Piggyback Loan Structures
There are several popular ways to structure a piggyback loan depending on your savings and financial strategy:
| Structure | First Mortgage | Second Mortgage | Down Payment |
|---|---|---|---|
| 80/10/10 | 80% | 10% | 10% |
| 80/15/5 | 80% | 15% | 5% |
| 75/15/10 (less common) | 75% | 15% | 10% |
Why Avoid a Jumbo Loan?
Jumbo mortgages come with a few extra hurdles:
- Higher credit score requirements (often 700+)
- Larger down payments (usually 10% to 20% minimum)
- Stricter income and asset documentation
- Higher interest rates (sometimes 0.25%-0.75% higher)
- More complex underwriting
By keeping your first mortgage conforming, you:
- Get lower rates
- Face easier loan approvals
- Have more lender options
- Potentially avoid private mortgage insurance (PMI) if structured right
Where Conforming Limits Matter Most
Conforming loan limits vary based on where you’re buying.
Chart: 2025 Conforming Loan Limits
| Area Type | Loan Limit for 1-Unit Property |
| Most of the U.S. | $806,500 |
| High-Cost Areas (e.g., CA, CO, NY) | $1,209,750 |
If you’re purchasing in a high-cost market, you can buy a much more expensive home before needing a jumbo loan. In “standard” areas, you hit the jumbo threshold much quicker. The darker shaded locations in the map below represent high-cost locations.
Pros of Using a Piggyback Loan
- Stay within conforming loan limits: Easier qualifications, better rates.
- Lower overall monthly payment: Second mortgages often have lower payments than jumbo loans.
- Smaller down payment options: An 80/15/5 structure requires just 5% down.
- Avoid PMI: Second mortgages don’t require private mortgage insurance.
- Flexibility to pay off second loan: You can pay the second mortgage off early without impacting the first loan.
Cons of Using a Piggyback Loan
- Second loan typically has a higher interest rate than the first mortgage.
- Two monthly payments: You must manage two lenders and two sets of statements.
- Risk of adjustable-rate second loans: Some second mortgages are HELOCs with variable rates.
- Closing costs for two loans: More paperwork and potentially more fees.
- Harder to refinance: If rates drop, refinancing can be more complex with two liens.
Who Should Consider a Piggyback Loan?
You might want to explore a piggyback loan if you:
- Are purchasing between $850,000 and $3M (depending on your area)
- Have strong credit (usually 680+)
- Want to avoid a large down payment
- Are strategically managing cash flow for other investments
- Want to avoid PMI without 20% down
However, if you plan to stay in your home for a short time, or if rates are high on second mortgages, a piggyback loan may not be the best choice.
Real-World Example
Scenario:
- Home Price: $950,000
- Location: Phoenix, AZ (standard limit $806,500)
Option 1: Jumbo Loan
- Single $950,000 jumbo mortgage
- 10% down ($95,000)
- Higher interest rate, stricter underwriting
Option 2: Piggyback Loan (80/10/10)
- $760,000 first mortgage (conforming)
- $95,000 second mortgage (piggyback)
- $95,000 down payment (10%)
Result:
- Access to conforming mortgage rates
- Avoid jumbo loan underwriting hurdles
- Potentially lower overall payment
Important Tips When Using Piggyback Loans
- Work with an experienced lender: Not all lenders offer piggyback programs.
- Compare interest rates: Make sure the second loan’s rate doesn’t negate the savings.
- Understand HELOC vs. fixed-rate second mortgages: HELOCs can be riskier if rates rise.
- Budget for two closings: You’ll likely pay separate fees for each loan.
Is a Piggyback Loan Right for You?
Piggyback loans can be an excellent way to avoid the complexity and higher costs of jumbo loans. If structured properly, they can save you thousands over the life of your mortgage and help you buy your dream home with greater flexibility.
However, it’s not a one-size-fits-all solution. Weigh the pros and cons carefully, and consult with a mortgage professional who understands piggyback options and your local market. Want to learn more? Speak with a specialist today by calling above, or just submit the Request Contact form on this page.