Qualifications for Mortgage Loans for Second Homes
Mortgage loans for second homes have certain mortgage underwriting guidelines. Mortgage loans for second homes are conventional mortgage loans and the mortgage rates are comparable as owner occupied homes. I have many mortgage loan clients who 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.
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 type of non owner occupied residential mortgage loan and the second type of non owner occupied residential mortgage loan is an investment home mortgage 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 and 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.
Second Home Financing versus Investment Home Financing
If you are purchasing a second home, the home cannot be less than 60 miles from your primary residence. If your second home purchase is less than 60 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 60 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 20% down payment. Mortgage rates for investment homes are higher than those of mortgage loans for second homes.
If you have any questions on mortgage loans for second homes, please contact me at 262-716-8151 or email me at firstname.lastname@example.org. Gustan Cho Associates are second home financing experts. Please sign up for our daily mortgage newsletter at www.gustancho.com.