What Should I Know About Buying a Second Home
- By Jim Blackburn
- on
- 100 first time home buyer FAQs
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.
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.
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.
Dreaming About a Second Home? Let’s Help You Make It a Smart Move
Download our free “Build Wealth With Real Estate” eBook — includes second-home vs. investment property comparison tips
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