What Constitutes a Second Home?

Typically a second home is at least 50 miles from your current home and used by you as a second home, typically in a vacation spot by the beach, on a lake, in the mountains ,at a ski resort and you do not rent it out. You also get mortgage rates the same as your primary residence. An investment property can be anywhere, usually requiring a higher down payment and a little higher rates.

A second home is one that you intend to occupy occasionally and not rent out. Like a cabin in the mountains, condo in a city, cottage on the lake, etc. It needs to be significantly remote from your primary residence - i.e. 50+ miles. An investment property is used for rental purposes and you do not intend to live there at all. Loan program guidelines and minimum down payment vary depending on whether it's considered a second home or investment property.

What they said... Downpayment for an investment property is usually at least 15% while a 2nd home (vacation home) can be as little as 10%. In addition to the mortgage rate being higher, if you make less than a 20% downpayment the PMI cost is much higher for investment property as well.

There is NO MILEAGE requirement for a property to be a second home. Rather it has to make logical sense, otherwise lenders suspect you are buying an investment home and trying to pass it off as a second home to get a better deal. Living in Minneapolis, MN and buying a second home next door in St Paul, MN is a clear no, but living in Minneapolis, MN and buying a lake home 150 up north makes sense, as would a snowbird home in Arizona. www.Minneapolis-Mortgage.net

An investment property is ANY property that is used for rental purposes.. if you live in a home but rent out a room, you have an investment property.. a 2nd home is a home where you spend some of your time living there but you live elsewhere more than 50% of the year. If you have a 2nd home, but use it as a seasonal rental, then it's considered an investment home. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com