Primary Home Mortgage Guide: What Counts, What Doesn’t, and How to Qualify
Buying your first home? Confused about what counts as a primary residence for a mortgage? This guide explains what lenders look for, how it impacts your loan approval, and how to qualify for the best rates on your primary home mortgage.
When buying a home, one of the most important terms you’ll come across is “primary home.“ But what does that really mean? And why does it matter so much when you’re applying for a mortgage? This guide will explain everything you need to know about primary homes, second homes, and investment properties. We’ll break it down in plain language so you can make smart decisions, get the best loan terms, and avoid surprises.
What Counts as a Primary Residence for a Mortgage?
A primary home, or residence, is where you live most of the year. It’s where you usually sleep at night, get your mail, are registered to vote, handle your taxes, and have your driver’s license registered.
Lenders and the IRS care about whether a home is your primary residence because it affects many important things like your mortgage rate, down payment, tax benefits, and even whether you get approved for a loan. The term “primary home” is a big deal for lenders because it shows that you’re likely to take care of the place, which lowers their risk and can lead to better terms for you when you borrow money.
Primary Home or Second Home? Know Which Mortgage Fits You
Understand the key differences in financing, tax benefits, and down payment requirements.
Why Mortgage Rules Are Different for a Primary Home
Mortgage lenders offer the lowest rates and down payment options for primary homes. That’s because people usually take better care of the home they live in. In fact, government-backed loans like FHA, VA, and USDA are only available for primary homes.
VA Loan Primary Residence vs Second Home Eligibility
VA loans are only for primary residences. You must move in within 60 days and plan to live there for at least one year. You must use conventional or non-QM financing if you want a second home.
FHA Loan Occupancy Requirements: Primary vs Second Home
FHA loans are exclusively for primary residences, meaning they cannot be used to purchase vacation or investment properties. To qualify, buyers must move into the home within 60 days of closing and inhabit it as their main residence for a minimum of 12 months.
Conventional Loans
Conventional loans offer better rates on primary homes vs. second homes or investments.
Jumbo Loan Limits for Buying a Second Home
When purchasing a second home in high-cost areas, buyers often need to consider jumbo loans if the property’s price surpasses the conforming loan limit. These loans typically require higher credit scores, usually around 700 or above, and demand larger down payments, frequently ranging from 15% to 20%. Additionally, jumbo loan documentation requirements are more stringent than conventional mortgages.
Can You Have Two Primary Homes?
No. By definition, a person can only have one primary home. But sometimes you can buy another home and still qualify for primary residence financing — even if you own one.
Here are some real-life examples:
1. Job Relocation
If you get a job in another city or state more than 100 miles away, lenders may allow you to get another primary home mortgage. This rule is often used when people move for work and plan to rent or sell their old home.
2. Upsizing
If your family is growing, and you need more space, you might buy a bigger house nearby. Say you’re in a 1,500 sq ft condo and plan to move into a 2,500 sq ft house — that can count as your new primary home.
But suppose you’re moving from a 1,500 sq ft home to a 1,700 sq ft one down the street. That likely won’t qualify unless you sell your current home or refinance it as an investment property.
3. Downsizing
Your kids moved out, and you want a smaller, easier-to-maintain home. If you’re going from a 5,000 sq ft house to a 2,000 sq ft townhouse, this new home can be your primary residence too. Lenders will want to know your reasons — and if the move makes sense.
Buying a Second Property as a Primary Home
You can buy a second property and still get a primary home mortgage in certain situations:
- If the second property is substantially different in size or use
- If the second property is closer to work
- If the new home meets a real lifestyle need (like accessibility for health reasons)
Just know this: lenders are strict. They look at commute times, home sizes, market rents, and your intentions. They want a logical reason for the new home being your primary residence.
Underwriting Guidelines: Primary Home vs Vacation Property
When lenders review mortgage applications, they pay close attention to things like the size and location of the home and what it’ll be used for. If someone is applying for a loan on a vacation property, it’s key that it’s not too far away from their main home and that they don’t plan to rent it out long-term. A good credit history, a steady income, and low debt can increase your chances of getting approved for financing.
Buying Your First Home or Vacation Property? We’ll Help You Decide
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Differences Between Primary, Second, and Investment Homes
Let’s break it down simply:
| Type of Home | Down Payment | Mortgage Rates | Can You Use FHA/VA? |
| Primary Home | As low as 0-3.5% | Best rates | Yes |
| Second Home (Vacation) | Minimum 10% | Slightly higher | No |
| Investment Property | Minimum 20-25% | Highest | No |
Understanding the differences can help you plan ahead, especially if you’re trying to keep monthly costs low.
Financing Options for a Second Home vs Primary Residence
When you’re looking to buy a house, you’ve got many loan options to consider. There are different types of loans, such as FHA, VA, USDA, Conventional, and Non-QM loans. Some of these loans have better terms because they’re backed by the government, which makes it easier for folks to get the money they need for their primary home.
On the other hand, if you’re looking to purchase a second home, the options are more limited and generally come with stricter requirements. You’ll mostly be looking at Conventional and Jumbo loans and non-QM loans. Since these loans are designed for secondary homes, they have stricter rules to follow, making the process more challenging than securing financing for your primary home.
Tax Implications of Owning a Primary and a Second Home
Have you heard you can reduce property taxes by applying for a homestead exemption?
You can deduct the interest on your mortgage for both your primary home and a second home, but there are some limits from the IRS to keep in mind. Owning your primary residence might qualify you for a homestead exemption, which can help lower your property taxes. That means you’ll save some cash on your yearly tax bill.
In many states, you can score lower property taxes if your home is your principal place of residence. Every county or city has its own rules, and they don’t always let you know automatically.
But there’s no homestead exemption for your second home, so you won’t get that tax break. Plus, if you sell your second home and make a profit, you might end up having to pay capital gains tax on that gain.
You usually need to apply for the exemption yourself. This could save you a bunch of money each year. Check your local tax assessor’s website to see if you qualify for a primary home tax exemption.
Debt-to-Income Ratios: Both Homes Count
If you’re buying a new primary home but keeping your old home, lenders must include both mortgages in your debt-to-income (DTI) ratio.
Here’s how it works:
- Lenders add your monthly payments for both properties: principal, interest, taxes, insurance (PITI), and HOA if applicable.
- For FHA, the max back-end DTI is 56.9% (with AUS approval).
- For Conventional loans, the DTI cap is usually 45-50%.
If your DTI is too high, there are a few workarounds:
Using Rental Income from Your First Home
If you are considering renting out your current home, it’s important to note that lenders may accept 75% of the market rent as part of your income. To qualify for this, you must have at least 25% equity in your current home and provide an appraisal with a rental analysis.
If you don’t have 25% equity, you may need to pay down your mortgage or refinance as an investment property.
FHA, VA, and USDA Loans Only for Primary Residences
FHA, VA, and USDA loans are specifically designed for primary residences, and many people may not realize that these loans cannot be used to purchase second homes or rental properties. They are strictly intended for owner-occupants.
If you plan to use a government loan, you need to move into the property within 60 days and live there for at least one year. If you want to buy a vacation home or a rental property, you will need a conventional or non-QM loan.
Can You Lie About a Home Being Primary?
No. And you shouldn’t.
Mortgage fraud is a federal crime. Telling a lender a property is your primary home (to get better rates or a lower down payment) when it’s not can lead to fines, foreclosure, and even prison time.
Lenders verify occupancy through various means, including utility bills, lease agreements, commute patterns, and tax filings. It’s important to always be honest about your intentions for using the home.
Occupancy Rules and Mortgage Eligibility for Second Homes
When buying a second home, there are specific occupancy rules you need to keep in mind. First, you have to move into your primary residence within 60 days after closing on the purchase. This means you can’t just buy a home and leave it empty or use it as an investment property immediately.
Additionally, while you can’t rent out your second home for long periods, short-term rentals might be allowed in certain situations.
To ensure you’re following these rules, lenders will check your occupancy by looking at things like utility bills, any changes of address, and where you work. This helps them confirm that you actually live in your primary home. So, if you’re considering getting a second home, be aware of these guidelines to stay eligible for a mortgage.
Confused About Primary and Second Home Loans? We’ll Guide You
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Primary Home Mortgage Loan Options at Gustan Cho Associates
At Gustan Cho Associates, we make it easy to buy your primary home—even if you:
- Have high DTI
- Have less-than-perfect credit
- Are self-employed
- Want to keep your old home
We offer:
- FHA, VA, and USDA loans
- Conventional and Jumbo loans
- Non-QM mortgages for unique situations
- Bank statement loans for self-employed buyers
- No lender overlays
We understand real-life situations. We’re here to guide you through every step, including understanding what counts as a primary home and how to use it to your advantage.
Final Thoughts: Make Your Next Move Count
Knowing the difference between a primary home, a second home, and an investment property can save you time, money, and stress. Whether you’re moving for work, upsizing, or downsizing, you need the right lender and the right loan.
Gustan Cho Associates is open seven days a week, including evenings and holidays. We help buyers in difficult situations get mortgage approval. Call us today at 800-900-8569, text us for a faster response, or email us at gcho@gustancho.com.
Frequently Asked Questions About Primary Home:
Q: What Does “Primary Home” Mean When Getting a Mortgage?
A: A primary home is the place where you live most of the time. It’s your main address—the one you sleep at, get your mail at, and use for your taxes and driver’s license. It matters because lenders give better mortgage rates and lower down payments for your primary home.
Q: Can I Own Two Primary Homes at the Same Time?
A: No, you can only have one primary home. But you can buy a new one and qualify for primary home financing again if you’re moving for work, need a bigger house, or downsizing for a good reason. Just be ready to show the lender why the move makes sense.
Q: What’s the Difference Between a Primary Home, a Second Home, and an Investment Property?
A:
- Primary home: Where you live full time (best rates, low down payment)
- Second home: A vacation or part-time home (needs 10% down or more)
- Investment property: A home you rent out (higher rates, 20-25% down)
Q: What Kind of Mortgage Can I Get for a Primary Home?
A: You can get an FHA, VA, USDA, or Conventional loan for a primary home. Government loans like FHA and VA are only allowed for homes you’ll live in as your primary residence.
Q: Can I Still Get a Primary Home Loan if I Keep My Current House?
A: Yes, but the lender will count both mortgages when considering your debt-to-income ratio. If your DTI is too high, you may need to rent out the first house or refinance it as an investment property.
Q: Can I Use Rental Income From My First Home to Help Qualify for a Second Primary Home?
A: Yes, but only if you have at least 25% equity in your current home and can show an appraisal with rental analysis. Then, the lender can count up to 75% of the expected rent as income.
Q: Can I Get in Trouble for Saying a Home is My Primary Residence When it’s Not?
A: Yes! That’s mortgage fraud, and it’s serious. Lenders can check your address, utility bills, job location, and even your tax returns. Always tell the truth about how you plan to use the home.
Q: Do I Get a Property Tax Break for Having a Primary Home?
A: Many counties provide a homestead exemption or tax reduction for your primary residence. Usually, you need to file an application for it, and it can potentially reduce your yearly property taxes by hundreds or even thousands.
Q: What if I’m Self-Employed or Have a High DTI—Can I Still Qualify for a Primary Home Mortgage?
A: Yes! At Gustan Cho Associates, we work with all kinds of borrowers. We offer bank statement loans, non-QM mortgages, and no lender overlays to help you get approved, even with a unique financial situation.
Q: How Can I Apply for a Primary Home Loan with Gustan Cho Associates?
A: We make it simple! Call us at 800-900-8569, text us for a faster response, or email us at gcho@gustancho.com. We’re open 7 days a week, including evenings and holidays, and we’re here to help you easily get into your next home.
This blog about “Primary Home Versus Second Home Purchase” was updated on August 4th, 2025.
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