Second Home Investment Property Mortgage Information
For real estate buyers interested in purchasing a second vacation home or investment property, financing for a down payments, terms, and rates are different from a mortgage for use of purchasing a primary residence.
Investment properties also have many potential benefits. Whether utilizing the property as a rental to earn additional income and offset costs, exploring the potential tax benefits and deductions, or possibly betting on the potential for property appreciation, purchasing a second home is a good long-term assets option to explore.
Most mortgage insurance will not cover investment properties. As a result, buyers using this method as an option will need to expect to put down 20% – 25% to secure traditional financing for them. The more cash paid at the front of the purchase will typically allow for a lower annual percentage rate.
If there is an inability to pay the required minimum percentage for down payment, buyers can attempt to qualify for a second mortgage on the property but usually result in being declined.
Another option if you do not have a large down payment or have other extenuating circumstances, consider seeking out a neighborhood bank for financing rather than larger national banking and financial institutions.