Homebuyers and homeowners today demand a fresh approach to financing with a focus on flexibility and technology. They have options—and they have tools to research and find lenders that match what they need.
One of the most pressing issues for homebuyers is affordability, including down payment amounts and the additional costs of mortgage insurance if they can’t afford a 20% down payment.
You can offer a solution for homebuyers and for yourself: A piggyback HELOC through Figure’s platform will help them secure better pricing and avoid mortgage insurance, while you close more deals and grow your business, even in changing markets.
Read on to learn more about the flexibility of a piggyback HELOC for lenders in purchase and refinance scenarios.
Partner with Figure to tap into the full power of HELOCs—and reach more customers.
How piggyback HELOCs help lenders structure more compelling deals
Conventional loans require a down payment of at least 20% to avoid paying private mortgage insurance (PMI).
A piggyback HELOC through Figure’s platform will allow your clients to put down only 10%, and still avoid the additional costs of mortgage insurance.
This results in significant upfront and long-term savings for the borrower.
Homebuyer scenario: Using a traditional mortgage vs. a piggyback HELOC on a $700,000 property
Imagine you have a client who is interested in purchasing a $700,000 home.
With a traditional mortgage, they will be required to put down 20% or pay PMI. PMI typically costs between 0.5% and 1% of the loan amount annually.
A 10% downpayment necessitates a $630,000 loan which at 1%, can translate to:
$6,300 per year
$525 per month
To help your client avoid PMI, you offer a piggyback HELOC through Figure’s platform. Figure can support up to 90% CLTV and any combination of first and second lien, with 80/10/10 and 70/20/10 as the most common scenarios.
With an 80/10/10 structure, the client provides 10% down, and the piggyback HELOC supplies the remaining 10%.
Using this structure, the buyer can apply for a primary mortgage that covers 80% of the purchase price and avoids PMI. The HELOC is secured against the property’s value, with a five-year draw period.
Flexible refinancing: Help homeowners restructure their loan with a piggyback HELOC
Piggyback HELOCs also can be structured for home refinancing, allowing clients to access home equity or adjust their loan terms even if they don’t yet have 20% equity in their home.
Benefits for borrowers with less home equity or recently-originated mortgages
Homeowners who haven’t built up significant equity in their home—either because they haven’t owned it for long or their home hasn't increased in value significantly—often are unable to qualify for traditional cash-out refinances.
By using a piggyback structure during a refinance, they can access cash without needing to wait for substantial equity to build.
Overcoming Agency CLTV requirements for cash-outs
Agencies typically cap the CLTV ratio at 80% for cash-out refinances, which means the total of all loans on the property (including the new cash-out portion) can’t exceed 80% of the home’s value.
Borrowers who need more than what is allowed under the 80% cap can use a piggyback HELOC. The HELOC acts as a second mortgage that allows them to borrow additional funds beyond the first mortgage, offering greater financial flexibility.
Eliminating mortgage insurance
Homeowners who initially financed their purchase with more than an 80% LTV ratio must pay PMI until their equity reaches 20%.
Using a piggyback HELOC, they can reduce the LTV ratio of the first mortgage to below 80%, which will eliminate the PMI requirement and provide the homeowner with a more cost-effective financing solution.
Piggyback HELOC for lenders: Your competitive edge
Piggybacks are growing in popularity as lenders recognize the benefits and present them as competitive mortgage solutions for their clients.
According to CoreLogic, the percentage of piggybacked loans for conventional borrowers rose from 2.2% in June 2022 to 3.6% as of June 2024.
Piggyback HELOCs through Figure’s platform can offer lenders an advantage over your competitors.
Breaking down the affordability obstacle
Affordability is a pressing concern in today’s market, and traditional mortgage products are unable to effectively meet the nuanced financial needs of all clients.
National Mortgage Professional predicts that the use of piggybacked second mortgages are likely to continue “as long as affordability constraints persist.”
Piggyback HELOCs for lenders provide:
Customized financing solutions: Piggybacks allow lenders to give borrowers greater purchasing power by reducing the required down payment amount and helping them eliminate PMI.
Flexibility in loan structuring: The ability to use a piggyback HELOC for both purchase and refinance scenarios allows lenders to reach a wider range of client needs and interests, so you can close more loans.
“Our growing number of lending partners made it clear they want to embed our new piggyback to better meet their customers’ needs,” said Michael Tannenbuam, CEO of Figure.
Figure’s platform is a superior option for lenders and borrowers due to its streamlined, efficient process.
How Figure’s technology makes the piggyback process easier
Figure’s platform creates a frictionless process to originate second liens.
Our tech stack minimizes manual work for mortgage loan officers due to the automated import of Mortgage Industry Standards Maintenance Organization (MISMO) and easy documentation upload.
Loan officers and their clients benefit from the following features:
Complete control over underwriting, processing, closing doc generation, and funding, with visibility into piggyback status
Easy-to-use prequalification calculator to run piggyback scenarios with multiple FICO/CLTV combos for first lien LLPA reductions
Delegated UW completed in your LOS with second piggyback approval based on approved/eligible AUS
Reduced manual work to share data in our portal—simply import the piggyback MISMO and view and update as needed
Minimal clear-to-close conditions result in minimal closing delays
Streamlined interface to upload required collateral docs to our portal post-close in support of pre-purchase review
Underwriting of both the first and piggyback lien will be conducted by the partner originator, and Figure will provide eligibility criteria for the piggyback.
The first and second liens will close concurrently, with closing documents for the piggyback provided to the partner prior to close.
Our process is fully automated and designed for speed, so we won’t slow down your closing!
Offer smarter financing solutions and close more deals with Figure’s platform
Everyone deserves a chance at homeownership—and you deserve to thrive in your business.
A piggyback HELOC through Figure’s platform can help you grow your business and close more loans by attracting a broader range of clients.
Partner with Figure and let our cutting-edge technology and innovative tools be your competitive edge.
