Loan Programs
Second-Home Financing
A second home or vacation home is a property you occupy part-time, distinct from your primary residence. Financing these properties follows specific guidelines that differ from primary residence loans.
Lenders classify properties as second homes when the borrower occupies the property for part of the year and does not rent it out as a primary source of income. Occasional rental use may be permitted under certain loan programs, but regular rental activity may require investment property classification.
Down Payment Requirements
Conventional second home loans typically require a minimum of 10 percent down. Some lenders may require 15 to 20 percent depending on credit score, reserves, and the specific property. Jumbo second home loans may require 20 to 30 percent down.
Interest Rates
Rates for second homes are typically 0.25 to 0.75 percent higher than primary residence rates. This reflects the slightly higher risk lenders assign to non-owner-occupied properties.
Occupancy and Rental Rules
To qualify as a second home, the property must be occupied by the borrower for some portion of the year. The borrower must maintain exclusive control over the property. Rental income from the property generally cannot be used to qualify for the loan. Short-term rental restrictions at the condo or HOA level may affect financing eligibility.
Reserve Requirements
Lenders often require cash reserves of 2 to 6 months of PITI (principal, interest, taxes, and insurance) for second home loans. Higher reserve requirements are common for jumbo second home financing.
Keys Considerations
Florida Keys second home buyers should factor in flood insurance, windstorm coverage, and higher property taxes when evaluating affordability. Condo financing restrictions may apply in certain projects. Buyers should also be aware of local vacation rental regulations that may affect how the property can be used when not occupied by the owner.