Rental Property & Vacation Homes

Rental Property & Vacation Homes2020-05-07T10:52:30+00:00

Purchasing a vacation home or investing in rental property requires a slightly different approach than a home mortgage for your primary residence. With these personal and/or business investments there are different loan requirements because mortgage insurance is not available for loans on these purchases. As a result, borrowers will likely have to make a 20% down payment, pay all closing costs out-of-pocket (and not rolled into the loan amount), and may have to meet more stringent financial and personal qualifications.

  • Some lenders or loan programs may require borrowers to have at least 2 years of property management experience if the borrower intends to use the potential rental income to help them qualify for the investment loan.
  • Second home and investment property loans typically have a higher interested rate.
  • Less opportunity for lower down payment.

In addition to differences in qualification, mortgage loans for rental properties and second homes also are restricted by the property type.

Eligible PropertyNon-Eligible Property or Uses of Property
Single Family DwellingsTime Shares
TownhomesCo-ops
CondosSelect Manufactured Homes
Multi-Family HousingBed & Breakfasts

Other Financial Funding Options

Aside from opting for an investment loan for your rental property or second home, you can finance the purchase through other means—like a Home Equity Loan. This option provides for a more affordable mortgage loan, one with better rates and less of a down payment. Home Equity Loans are able to offer better terms because the loan would have a tangible collateral—your home.

KNOWLEDGE CENTER

Have a question?

Speak with a loan specialist at (813)-767-5020 or fill out the form.