Second home or vacation home loans are treated the same.

Second homes and rental homes and are financed differently.

If you can qualify for your purchase without the property generating any income, buy it as a second home. You’ll get a better mortgage interest rate, and qualifying is more straightforward when rental income is off the table.

However, if you need to rent out your second home to afford it, it becomes an investment property, not a second home.

You can buy a primary residence with just three percent down in many cases, but it takes at least ten percent down to buy a vacation home, and that’s if your application is very strong.

What about FHA or VA loans? Unfortunately, the government doesn’t back loans for anything but primary residences.

Your loan of choice for a second home will probably be a conventional loan underwritten by standards set out by Fannie Mae and Freddie Mac.

It is tempting to jump into a vacation home purchase, but first, weigh the benefits and costs. Ensure that it makes long-term financial sense to buy. While there are upfront costs, a second home purchase can be a nice addition to your real estate portfolio or retirement plan.

What are today’s second home mortgage rates? Mortgage rates are low across the board, so vacation home loans are cheap right now as well. Terms tend to be similar to primary residences without the smaller down payment options.

Get a custom quote with Scissortail Financial to explore the options for your vacation home purchase.