Mortgage Loans For Second Homes Lending Guidelines


This BLOG On Mortgage Loans For Second Homes Lending Guidelines Was UPDATED On June 12th, 2019

Mortgage Loans For Second Homes have certain mortgage underwriting guidelines. The main reason most second home buyers want to make sure they go with mortgages for second homes versus investment home mortgages is because of the lower down payment requirements and mortgage interest rates. Down payment on second home financing is lower than investment properties. Mortgage interest rates on second homes are substantially lower than investment homes.

  • Mortgages for second homes are conventional mortgage loans
  • FHA, VA, USDA are for owner-occupant properties only
  • Mortgage rates are comparable as owner-occupied homes
  • Many of our clients have a primary residence in Illinois and purchase a second home in Florida
  • However, there are certain underwriting guidelines on mortgage loans for second homes

In this blog, we will discuss Vacation And Second Home Lending Guidelines.

Types of Residential Mortgage Loans

There are two different types of non-owner occupied residential mortgage loans.

  • Second homes or vacation homes are the first types of non-owner occupied residential mortgage loan
  • The second type of non-owner occupied residential mortgage is an investment loan
  • Most second home buyers cannot qualify to purchase their second home because of certain restrictions

Underwriting Mortgage Loans for Second Homes

In order to qualify for mortgage loans for second homes, the deal has to make sense. The underwriter has to believe that it is really a second home and not an investment home.

  • For example, if you own a primary residence in the city of Tampa, Florida and you want to purchase another home in the same city or same county, you would probably not qualify as a second home purchaser
  • However, if you were to purchase a second home that is waterfront or golf course frontage, that would justify as a second home
  • However, if the second home purchase is alike and similar home like it is to the primary residence, the mortgage underwriter will not let that fly

Second Home Financing versus Investment Home Financing

If you are purchasing a second home, the home cannot be less than 100 miles from your primary residence.

  • If your second home purchase is less than 100 miles from your primary residence, it will be considered an investment home and need to be underwritten as an investment home

There are cases where homes less than 100 miles away from your primary residence can be classified for a second home mortgage but it needs to make sense such as being a waterfront home.

Minimum Down Payment on Second Homes

Mortgage loans for second homes require 10% down payment.

  • Mortgage loans for investment homes require a minimum of 15% to 20% down payment
  • Mortgage rates for investment homes are higher than those of mortgage loans for second homes

If you have any questions on second home financing, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at  Gustan Cho Associates are second home financing experts.  Please sign up for our daily mortgage newsletter at The Team at Gustan Cho Associates Mortgage Group is available 7 days a week, evenings, weekends, and holidays.

Related> Second Home Mortgage Loans

Related> Second home and Investment home loans

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