The final days of summer are fast approaching. One way to have an endless summer is by buying a second home. A second home mortgage is a loan taken out to purchase a vacation property or another residence separate from your primary home. Lenders treat these loans differently from mortgages on a main residence, since the risk is higher—borrowers are more likely to prioritize payments on their primary home if financial challenges arise. Because of this added risk, interest rates on second home mortgages are usually slightly higher, and the requirements can be more stringent. To qualify for a second home mortgage, lenders typically require a strong credit score, a stable income, and a larger down payment—often at least 10–20%. They will also review your debt-to-income ratio (DTI) more closely to ensure you can comfortably afford both mortgage payments, plus taxes, insurance, and maintenance costs for two homes. Some loan programs, like conventional mortgages backed by Fannie Mae and Freddie Mac, allow financing for second homes, but government-backed loans such as FHA, VA, or USDA are generally limited to primary residences. When considering a second home, it’s important to distinguish it from an investment property. A second home is intended for personal use, such as a vacation home or a family retreat. Lenders may restrict how often you can rent it out, whereas investment properties are purchased specifically to generate rental income. The difference matters because investment property mortgages come with even stricter requirements and higher interest rates.
