How to Buy a Second Home | What You Should Know About Vacation Homes and Investment Properties
- By Jim Blackburn
- on
- Investment Property, Real Estate Investor, Second Home Loans, Vacation Home, Wealth Building
1. Define Your Purpose: Vacation, Income, or Both?
Your goals will shape everything:
- Vacation home? You may qualify for second-home financing with lower rates than an investment property.
- Short-term rental? That’s classified as an investment property—and comes with stricter lending rules.
- Occasional use with some rental income? You’ll need to clarify this with your lender and possibly your accountant.
Pro Tip: The IRS and your lender both define second homes differently than investment properties. Your purpose matters.
If you’re buying a second home as an investment property, understand the numbers first. Calculate your DSCR Investment Purchase Loan Payment now to see how rental income affects your financing and whether the property will cash flow.
2. Be Ready for More Than Just the Purchase Price
Second homes come with second-home expenses. Make sure to factor in:
- Utilities and seasonal maintenance (especially for vacation properties)
- HOA fees, property taxes, and insurance (often higher on second homes)
- Property management if you won’t be nearby
- Vacancy periods if you plan to rent it
Even rental income isn’t guaranteed—budget conservatively to stay on solid ground.
Planning to rent out your second home for consistent income? Calculate your Buy & Hold: Cashflow, Appreciation, Equity, Depreciation & Tax Savings now to see the complete financial picture including rental income, appreciation, and tax benefits.
3. Financing Is Stricter—But Still Doable
Lenders usually require:
- A 10–20% down payment
- Strong credit and income documentation
- Proof you can cover both mortgages and monthly expenses
Unlike your first home, you won’t get down-payment assistance or first-time buyer perks. But with smart planning, a second home can be a powerful wealth-building tool.
Ready to explore your financing options for a second property? Calculate your Conventional Purchase Loan Payment now to understand what your monthly payment would look like with the typical 10-20% down payment required for second homes.
Want to understand the complete wealth-building potential? Visit our Build a Wealth Plan page to explore strategies for leveraging real estate to grow your portfolio and create long-term financial security.
Dreaming About a Second Home? Let’s Help You Make It a Smart Move
At Stairway Mortgage, we help you grow your lifestyle—and your portfolio—one smart step at a time.
📘 Download our homebuyer guides about second homes and investment properties.
📊 Check Current Rates for second home financing.
🧮 Run investment numbers with our Buy & Hold Calculator.
🏠 Explore strategies on our Build a Wealth Plan page.
Ready to Take Your First Step?
Skip the guesswork. Take our quick Discovery Quiz to uncover your top financial priorities, so we can guide you toward the wealth-building strategies that fit your life.
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