Second Home Versus Investment Home Financing
This BLOG On Second Home Versus Investment Home Financing Was PUBLISHED On April 3rd, 2019
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
- If the second home buyer does not meet the second home financing mortgage lending guidelines, the second home financing will not be allowed
- It will need to be financed as an investment home mortgage loan
Classification Of Second Home Versus Investment Home Financing
Home Buyers buying a second property, the home purchase needs to qualify as a second home financing property.
- If it does not, the lender will classify it as an investment home financing
- With investment home financing, the minimum down payment is 20% to 25%
- Mortgage rates are 0.50% or higher on investment properties because lenders consider it higher risk
- There are certain criteria for property to fall into the second home financing category
- For second home financing, second home buyers 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
- Homeowners who live in Tampa, Florida in a 2,500 square feet home and want to purchase another 2,500 square feet home two miles away from a 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 buyers 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
Home Buyers can qualify for second home financing on a home purchase that is close to their primary residence.
- The only way home buyers can qualify for second home financing on a property that is nearby main owner-occupied residence is if the second property purchase is the following:
- Waterfront property
- Oceanfront property
- Golf course property
The second home needs to make sense where the homeowner can use it as a second home due to the amenities and luxury of the second home purchase.
Qualifying For Second Home Or Investment Home Financing
Home Buyers who need to qualify for primary, second, or investment home financing with a direct lender with no mortgage overlays can contact us at Gustan Cho Associates at 262-716-8151 or text us for faster responce. Or email us at firstname.lastname@example.org. USA Mortgage is a national direct lender licensed in multiple states with no mortgage lender overlays on government and/or conventional loans. We are available 7 days a week, evenings, weekends, and holidays.