The median price of a home in Kaufman County, Texas, where Payovich was looking, jumped from $235,000 in 2019 to $310,000 in 2024. With the local housing market becoming more expensive, saving enough for a traditional down payment seemed out of reach.
“Interest rates were really high, and with the down payment we were going to need, it was out of reach for us at the time,” Payovich told MarketWatch. “It looked like we were going to have to put it off even longer, which we didn’t want to, because we don’t know how the market is going to be.”
Payovich secured an interest-free piggyback loan through the Texas State Affordable Housing Corporation, which provided him $12,000 to reduce his upfront costs.
While popular before the 2008 housing crash, these types of second mortgages fell out of favor due to concerns about their role in the crisis. At the time, buyers were encouraged to take on risky second loans that often had adjustable interest rates.
Today’s piggyback loans are different. Offered by state housing agencies with far stricter regulations, they are often interest-free and sometimes forgivable.
Source: mpamag.com