Are you buying a Second Home?

Whether you're purchasing a vacation home in the mountains, a lakefront retreat, or a property closer to family, buying a second home is a major milestone. The financing process differs from buying a primary residence, and understanding your options can help you make the smartest move.

A second home is a property you intend to occupy part-time throughout the year, separate from your primary residence. It is not the same as an investment property, although second homes can still offer long-term financial benefits such as appreciation and rental income (if allowed).

To qualify as a second home, most lenders require:

• The property is a reasonable distance from your primary home.
• You intend to occupy the property for part of the year.
• It is suitable for year-round use.
• You do not rent it out full-time (some occasional short-term rentals may be allowed).

• Backed by Fannie Mae or Freddie Mac.
• Minimum down payment: 10%.
• Requires full income documentation (W2s, tax returns, pay stubs).
• Credit score: Typically 620+, but better rates at 700+.
• Competitive interest rates, lower than investment property loans.
• Cannot be used for full-time rental purposes.

• For loan amounts above conventional loan limits.
• Requires larger down payments (15-30%).
• Strong credit (700+), income, and asset verification.
• Often used for luxury or high-end vacation properties.

• Designed for self-employed individuals.
• Use 12-24 months of personal or business bank statements instead of tax returns.
• Down payment: Typically 10-20%.
• Credit score: 660+

• Qualify based on liquid assets rather than income.
• Ideal for retirees or high-net-worth individuals.
• Down payment: Varies, often 20-30%.
• Assets must be sufficient to cover mortgage and living expenses for several years.

• Not typically used for second homes, but some non-QM lenders allow second homes that are also used part-time as rentals to qualify.
• Qualify based on rental income coverage of debt obligations.

• For non-U.S. residents buying a second home in the U.S.
• Requires 30-40% down payment.
• No U.S. credit required.
• Must provide passport, visa, and international income or asset documentation.

Second homes typically come with better terms than investment properties:

• Lower down payments.
• Lower interest rates.
• Easier qualification standards (for QM loans).

However, if you plan to rent out your second home extensively, your lender may reclassify it as an investment property, changing your loan options and terms.

Consider your:

• Intended use of the home (personal vs. rental).
• Income documentation and financial situation.
• Long-term goals (vacation use, appreciation, future retirement).
• Preference for flexibility vs. best rates.

Whether you're a W2 employee, self-employed, or a foreign national, there's a loan program that fits your needs.