Piggy back loan

A second loan on a home, usually up to 15% of the property’s purchase price

If you can make a 10% down payment on a home, one way to avoid paying for Private mortgage insurance (PMI) is to get two loans.

Here is how it works: you get a loan for 80% of a property’s purchase price at a standard interest rate and then get a second, "piggy back" loan at 10% of the purchase price, though at a higher rate.

This type of financing is commonly called 80-10-10. If the first loan is less than $227,150, you can opt for a 75-15-10 arrangement, which will give you a lower interest rate on the first loan. To figure out if getting a second loan makes sense for you, compare your monthly costs with a piggy back loan versus PMI.