80/20 loans are probably the most popular type of piggyback loans. It is essentially two loans designed to avoid having to get PMI or Private Mortgage Insurance and keep from making a down payment. The first main loan is for 80% of the LTV or limited to the appraised value of the home and the second one is 20% of the sales price. This is why these loans are also known as 100% financing loans.
In addition, to this basic structure, the borrower can expect to only pay additional costs in the form of closing costs or out of pocket costs. The 80% loan will have a better interest rate than the 20% loan. However, you will have to qualify for 80/20 loans by having a debt to income ration that is under 50% on the 2nd loan or 20% loan.
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