Primary Home Mortgage Guide: What Counts, What Doesn’t, and How to Qualify
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 Is a Primary Home?
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.
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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.
For example:
- FHA loans allow just 3.5% down with credit scores as low as 580, but only for a primary residence.
- VA loans are zero down for qualified veterans—again, only for a primary home.
- Conventional loans offer better rates on primary homes vs. second homes or investments.
You can only have one primary home mortgage at a time. If you already own a home and plan to buy another, there are rules about what qualifies as a new primary home.
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.
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Primary Home vs. Second Home vs. Investment Property
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.
Property Tax Exemptions for Primary Homes
Have you heard you can reduce property taxes by applying for a homestead exemption?
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.
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.
Confused About Primary and Second Home Loans? We’ll Guide You
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How to Qualify for a Primary Home Loan with 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 July 15th, 2025.
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