Primary Home, Second Home, Investment Home

When a mortgage loan borrower applies for a residential mortgage home, there are three statuses.  Primary home, second home, and investment home.   FHA insured mortgage loans are only available for primary homes and not available for second and investment homes.   With conventional loans, a minimum of a 5% down payment is required for a primary home, 10% minimum down payment is required for second homes, and 20% minimum down payment is required for investment homes.

Mortgage Rates For Primary Home, Second Home, Investment home

Mortgage rates are the lowest for primary home loans.  Second home loan mortgage rates are slightly higher than primary home mortgage rates and investment home mortgage rates are normally the highest.

What If I Have A Primary Home But Want To Upgrade To Another Home And Sell My Primary Home After I Move

Many homeowners are faced in a dilemma where they already own a primary residence but want to relocate and purchase another home to be their primary residence but do not want to sell their current primary residence until they move into their new home.   These home buyers are told many times by mortgage lenders that if they purchase another home without selling their current primary residence, that they would only qualify as an investment home and need to put a larger down payment and accept the higher investment home mortgage rates.  This can be a possibility, however, as long as the deal makes sense, it can be financed as a primary home.  What are some scenarios for this case scenario to make sense.

1.  If the new home purchase is larger than 25% in square footage, the home buyer is upgrading so this makes sense to be classified as a primary home.  You can write a letter of explanation and explain that you are upgrading to a larger home due to lack of space and that you intend on selling your primary home after you move.  This will qualify the home buyer for a primary home mortgage loan.

2.  If you are moving from a large home to a townhome or condominium, the home buyer can be down sizing since their kids are grown up and are empty nesters.  This case scenario makes sense and a good letter of explanation would be sufficient to qualify for a primary home residential loan versus an investment home loan.

If your current mortgage lender gives you a hard time and denies you for a primary home loan because you have not sold your existing primary home, please contact me at 262-716-8151 or at

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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