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  Piggy Back Loan Definition
Piggy Back Loan When purchasing a home, you may opt to take out a second loan in order to pay a lower down payment and still avoid paying private mortgage insurance. This type of loan is referred to as a piggy back loan. Your first loan would be for 80 percent of the purchase price and the second loan would be for 10 to 15 percent of the purchase price, requiring you to only come up with a 5 to 10-percent down payment. The interest rate on the smaller, second loan is likely to be higher than the larger loan.

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