Second Home Versus Investment Home Financing
Second Home Versus Investment Home Financing:
For homeowners who currently own a primary residence, they can possibly qualify for a second home on their next home purchase. A second home can be a vacation home in a resort area or just a regular single family condominium or single family home. Second home financing requires more of a down payment than an owner occupied home. Conventional mortgage lending guidelines require a minimum of 10% down payment for second home financing. Second home financing mortgage rates are slightly higher than owner occupied homes, maybe 1/8% or 0.25% higher than primary residence mortgage loans. Second home financing have strict requirements and if the second home buyer does not meet the second home financing mortgage lending guidelines, the second home financing will not be allowed and it will need to be financed as an investment home mortgage loan.
Classification Of Second Home Versus Investment Home Financing
If you are buying a second property, the home purchase needs to qualify as a second home financing property. If it does not, the mortgage lender will classify it as an investment home financing where the minimum down payment is 20% to 25% and mortgage rates are 0.50% or higher. There are certain criteria to for a property to be fall into the second home financing category. For second home financing, you need a 10% down payment versus a 20% to 25% down payment and mortgage rates are over 0.50% lower than investment home financing.
Second Home Versus Investment Home Financing Qualification Requirements
There are certain requirements for a second property purchase to qualify for second home financing. The deal needs to make sense. If you live in Tampa, Florida in a 2,500 square feet home and you want to purchase another 2,500 square feet home two miles away from your primary residence, the second property purchase will not qualify for second home financing. On this case scenario, the second property purchase will qualify for an investment home financing and not second home financing. However, if you were to purchase a 2,500 square feet home in Vail, Colorado, this purchase will qualify for second home financing because there is a great distance from Tampa, Florida to Vail, Colorado.
Second Home Financing Close To Primary Home
You can qualify for second home financing on a home purchase that is close to your primary residence. The only way you can qualify for second home financing on a property that is nearby your main owner occupied residence is if the second property purchase is a waterfront property, ocean front property, or golf course property where the homeowner can use it as a second home due to the amenities and luxury of the second home purchase.