The definition of a Second Home from a lending perspective is a property that you will use for personal use, but which is not your principal residence.  When you are looking to purchase a Second Home with financing, it is important to understand the difference between a Lender’s definition of a Second Home vs. an Investment Property.  An Investment Property is a property owned as an investment, with the purpose of ownership being for business purposes (such as a rental property) as opposed to personal use.

Lenders underwrite Primary Residences, Second Homes and Investment Properties differently.  There are different down payment requirements, interest rates, and underwriting guidelines.  In many circumstances, your occupancy intention when purchasing a second home will be very clear to lenders .  In other cases, perhaps if you intend to rent out the property seasonally while you are not using it or if it is next door to your existing primary residence or another investment property; the occupancy intention may be less clear to your Lender.  It is a good idea to communicate with your Mortgage Banker prior to making your offer when purchasing a second home so you know up-front how your lender will interpret the occupancy and what loan terms, rates & underwriting guidelines will apply to your second home purchase.

In many cases, Select Home Lending will accept loan applications as a second home with some seasonal rental income! Speak with one of our Licensed Mortgage Brokers for more information.

Below are some examples of how Second Home Purchase Transactions differ from the purchase of a Primary Residence.

• FHA & VA loan programs are ineligible for the purchase of a Second Home.
• The minimum down payment for the purchase of a Second Home with a conventional loan is 10%.
• Debt-To-Income ratios for second homes are slightly more restrictive.
• The cost of mortgage insurance if you will have less than a 20% down payment is higher.
• Lenders may require additional post-closing reserves.

Select Home Lending offers some of the most flexible second home guidelines in the industry.  Contact one of our Licensed Mortgage Brokers for a personal review of your scenario and a better understanding of the nuances of financing your purchase of a second home.

Am I Ready to Buy A Second Home?

Buying a second home is a significant financial decision not to be taken lightly.  How do you know if your finances are ready to support a second home?  Below are some considerations to take into account when deciding whether the time is right for you to buy a second home.  

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