Second Home Financing
Second home financing can only be financed through a conventional mortgage loan program. Second homes cannot be financed with FHA insured mortgage loans, USDA mortgage loans, or VA mortgage loans. Second home financing can only be financed through conventional and/or portfolio mortgage loans. Fannie Mae’s HomePath mortgage loan program offers second home financing with a 10% down payment. The minimum down payment required for second home financing is a 10% down payment. Second home financing is different than investment home financing where with investment home financing, the minimum down payment requirement is 15% down payment. With investment home financing, potential rental income can be used to qualify for the borrower’s income. Investment home mortgage rates are about 0.50% higher than primary and second home financing mortgage rates. Second home financing mortgage rates are almost the same as primary home mortgage rates. Second home financing mortgage rates might be 0.125% or 0.25% higher than owner occupied primary homes mortgage rates.
Qualifications To Be Classified As Second Home
If you are planning on purchasing a second home, there are certain qualification requirements in order to classify it as a second home and not investment home. Being classified as an investment home will require more money down and the mortgage rates on investment home financing is much higher than it would be a second home financing. There are strict mortgage lending guidelines for it to be classified as a second home.
Distance Between Primary And Second Home
First, the second home needs to make sense. If you live in a 2,000 square feet home in Tampa, Florida and want to purchase a 2,000 square feet home in Clearwater, Florida, which is only 15 miles away from your Tampa, Florida main residence, the mortgage underwriter will not buy that and will underwrite the Clearwater, Florida mortgage loan application as an investment home which will probably require a 20% down payment and mortgage rates which are 0.50% to 1.00% or more higher than it would be for a second home mortgage loan. However, if the Clearwater, Florida home were in a resort location such as ocean front or in a golf course community, it can possibly be considered a second home even though it is only 15 miles away from your owner occupied primary residence in Tampa, Florida. A good example of second home financing would be if your second home purchase was in Miami, Florida, which is hours away from Tampa, Florida, then it can be classified as a second home. Out of state home purchases can always be classified as second home financing due to the distance.