Can You Refinance a Piggyback Loan?

Last updated 12/05/2025 by

Edited by

Summary:

You can refinance a piggyback loan to combine both mortgages into a single, simpler loan. The process can lower your interest rate, remove PMI, and reduce monthly payments — but timing and equity matter. Here’s how to do it right.

A piggyback loan — also known as an 80/10/10 mortgage — helps buyers avoid PMI and stay under jumbo loan limits. But once you’ve built equity, managing two separate loans can become more hassle than help. Refinancing can simplify your mortgage and save you money, but knowing when and how to do it makes all the difference.

How to Refinance a Piggyback Loan

Here’s a step-by-step look at how refinancing a piggyback loan typically works:

Check your equity: Lenders usually want your combined loan-to-value (CLTV) ratio below 80% to refinance both loans into one.
Review your credit: Aim for a credit score of 700 or higher for the best refinance rates.
Get your home appraised: Updated home values help confirm your eligibility and new LTV.
Compare lender options: Request quotes for both single-loan refinances and partial refinances of the second loan only.
Close on your new mortgage: Once approved, your new loan pays off both previous balances, leaving you with one consolidated mortgage.

Compare Home Loans

Compare rates from multiple vetted lenders. Discover your lowest eligible rate.

Compare Rates

When to Refinance a Piggyback Loan

The ideal time to refinance is when interest rates are favorable, your home’s value has increased, and you’ve built enough equity to qualify for a single mortgage. Consider refinancing if:

Your second loan has a high rate: Many piggyback second mortgages or HELOCs carry variable interest rates that increase over time.
You’ve built 20%+ equity: Once your combined LTV drops below 80%, you can refinance without PMI.
Rates have dropped: A lower fixed rate on a single mortgage can reduce long-term costs.
You want simpler payments: Refinancing combines two loans into one monthly payment and one statement.

Smart Move: If your HELOC rate is climbing, refinancing both loans into a fixed-rate mortgage can lock in stability and lower your total interest cost.

Types of Piggyback Loan Refinancing

Depending on your equity, income, and credit, you can refinance your piggyback loan in different ways:

Full refinance: Combine both the first and second mortgages into one new conventional loan. Ideal once your LTV is 80% or lower.
Partial refinance: Refinance only the second mortgage if it carries a high or adjustable rate.
HELOC-to-fixed refinance: Convert your HELOC into a fixed-rate home equity loan to stabilize monthly payments.

Refinance Options for Piggyback Loans: Side-by-Side Comparison

When refinancing an 80/10/10 mortgage, you can choose between different approaches depending on your equity, loan type, and financial goals. Here’s how the main options compare:

Refinance Type	How It Works	Best For	Key Benefits	Possible Drawbacks
Full Refinance	Combine both first and second loans into one new mortgage once your combined LTV is below 80%.	Homeowners with 20%+ equity and strong credit.	Simplifies payments, may lower rate, and removes second lien.	Closing costs and new 15–30-year term may extend payoff.
Second Loan Refinance	Refinance only your second loan (HELOC or home equity loan) into a fixed-rate product.	Borrowers happy with their first mortgage rate but facing rising HELOC rates.	Stabilizes monthly payments, locks fixed interest rate.	Doesn’t simplify payments — you’ll still have two loans.
Rate-and-Term Refinance	Keep the same loan amount but lower your interest rate or shorten the loan term.	Borrowers with improved credit or lower market rates.	Reduces total interest and may shorten repayment timeline.	Closing fees may offset savings if you sell soon.
Cash-Out Refinance	Refinance both loans into one and borrow extra funds using your home equity.	Homeowners who want to consolidate debt or fund improvements.	Accesses cash while simplifying mortgage structure.	Higher loan balance and stricter credit requirements.

This comparison makes it easier to see how your goals — whether it’s lowering rates, simplifying payments, or locking in fixed terms — influence which refinance path fits best. Always compare closing costs and long-term savings before deciding.

Smart Move: If your second loan is a HELOC, refinancing before variable rates rise further can protect you from higher future payments.

Benefits of Refinancing a Piggyback Loan

Refinancing can provide both financial and practical benefits. Here’s what homeowners typically gain:

Lower overall rate: A single, consolidated loan often qualifies for better terms than two separate loans.
One monthly payment: Simplifies budgeting and reduces administrative hassle.
PMI-free savings: If you’ve reached 20% equity, your new loan won’t require PMI.
Predictable interest: Fixed-rate refinances remove the uncertainty of rising HELOC rates.

Drawbacks to Consider

While refinancing offers advantages, it’s not always the best move. Before applying, consider these potential downsides:

Closing costs: Refinancing fees typically range from 2%–6% of the new loan balance.
Equity requirements: You may not qualify if your combined LTV exceeds 80%.
Credit impact: A hard credit inquiry may temporarily lower your score.
Longer repayment period: Resetting to a new 30-year term can extend your payoff timeline if you don’t adjust your payments.

Pro Tip: If your goal is to save money long term, ask your lender to quote a shorter loan term (like 20 or 15 years). You’ll pay less interest even if monthly payments rise slightly.

Example: Refinancing a Piggyback Loan

Suppose you have an 80/10/10 loan with a $400,000 first mortgage and a $50,000 second loan at 8% interest. After several years, your home value rises and your combined LTV drops to 78%. Refinancing into one 30-year fixed mortgage at 6.5% could:

Lower your monthly payments by $200–$300
Eliminate the second loan entirely
Save over $20,000 in total interest over the life of the loan

When Not to Refinance

Refinancing isn’t always the right move. You may want to hold off if:

Interest rates have increased significantly since you first borrowed
You plan to sell your home within two years (you may not recoup closing costs)
Your credit score has dropped below 680
Your home’s value hasn’t risen enough to reduce your LTV

Alternatives to Refinancing

Pay off the second loan directly: Apply extra payments toward your higher-interest loan to reduce debt faster.
HELOC recast: Ask your lender about re-amortizing your HELOC balance into fixed payments.
Loan modification: If struggling with payments, see if your lender offers term extensions or temporary rate reductions.

The Final Word

Refinancing a piggyback loan can be an excellent way to simplify your mortgage and reduce long-term costs — but only if market conditions and your financial profile align. Compare multiple quotes, review total closing costs, and ensure your new loan helps you meet your homeownership goals faster.

Key takeaways

You can refinance a piggyback loan to combine your first and second mortgages into one.
Wait until your combined loan-to-value (CLTV) ratio is 80% or lower for the best rates and no PMI.
Compare costs — refinancing saves most when rates drop or HELOC interest rises.
Refinancing isn’t always ideal if you plan to sell soon or your credit has declined.

What You Can Do Next?

Compare mortgage lenders that offer refinancing for piggyback and 80/10/10 loans to find your best deal.

Compare top-rated lenders on SuperMoney’s Best Piggyback Loans page to find the most competitive rates and terms for your next home purchase.

FAQs

Can I refinance both piggyback loans into one?

Yes. Once your combined loan-to-value (CLTV) ratio is 80% or lower, you can refinance both loans into one new conventional mortgage.

Can I refinance only my second loan?

Yes. If your second mortgage or HELOC has a high rate, you can refinance just that loan while keeping your first mortgage intact.

Do I need to pay closing costs to refinance?

Most refinances include closing costs, typically 2%–6% of your new loan amount. Compare lender estimates to ensure the savings outweigh the fees.

Will refinancing remove my PMI?

If your new loan keeps your LTV below 80%, you can refinance without PMI — even if your original loan required it.

Show Article Sources

Share this post:

Table of Contents