Short answer
It depends on your numbers. A piggyback is a second mortgage, often a home equity line, taken out at the same time as your first mortgage so the first loan is smaller. That can reduce or avoid private mortgage insurance, but you'll have two loans and two payments. Fannie Mae allows it when the second is recorded, disclosed, at a market rate and has regular payments. Tom can price both ways side by side.
How does a piggyback work?
Instead of one larger first mortgage with mortgage insurance, you take a smaller first mortgage plus a second mortgage or HELOC from a lender at closing. Both are secured by the home, and the lender counts both when it looks at your combined loan-to-value and your monthly debts.
What does Fannie Mae require of the second?
Fannie Mae's Selling Guide (B2-1.2-04) allows subordinate financing on a first mortgage it buys when the second is:
- evidenced by a note and a recorded mortgage, and clearly second in line;
- disclosed, with its terms, to Fannie Mae, the appraiser and any mortgage insurer;
- at a market interest rate, with payments that at least cover the interest so the balance doesn't grow; and
- not a short balloon loan, with some exceptions.
A second mortgage from the seller at a rate well below market is treated as a sales concession, which reduces the price used for the loan.
How does it compare with PMI?
- Payments: a piggyback adds a second payment, often with an adjustable rate if it's a HELOC.
- Removing it: PMI on a conventional loan can be removed once you reach enough equity; a second mortgage stays until you pay it off. See removing PMI.
- Refinancing later: a second lien needs to be paid off or subordinated when you refinance. See refinancing with a HELOC.
Which costs less depends on rates, your credit and how long you'll keep the loan, so compare the full monthly payment and the cost over the years you expect to stay.
Is down payment assistance a piggyback too?
Some down payment assistance programs are set up as a second loan with their own repayment terms, and Fannie Mae has separate rules for these community second loans. Ask Tom how any program you're considering is structured. See NH Housing down payment help.
Sources
Checked November 2, 2026. Rules and dates change, so confirm current details before you rely on them.
General information only, not tax or legal advice. Program availability, eligibility and terms vary by lender and are subject to change and to underwriting approval. Not a commitment to lend.