Secondary Home
A property the borrower will occupy part-time, such as a vacation home, financed at terms between primary and investment.
Secondary-home financing exists in a middle tier between primary residences and investment properties. The borrower must intend to occupy the home themselves for at least a portion of the year, the property must be suitable for year-round occupancy in most cases, and rental restrictions often apply.
Down payment requirements typically run 10%–25%, rates sit slightly above primary-residence rates, and reserve requirements are higher than primary. Lenders verify that the location is a reasonable distance from the primary, buying a vacation home five miles from your primary raises red flags.
Many borrowers eventually convert a second home into either a primary (downsize move) or a rental (after a primary upgrade). Either transition is fine, but a near-term plan to rent the property out should generally be financed as an investment property from day one.
Related terms
Other terms you'll see alongside Secondary Home
The home a borrower lives in as their main place of residence, qualifying for the most favorable loan terms.
A property purchased not to live in but to rent out or hold for appreciation, with stricter financing terms.
Liquid funds the borrower must have available after closing, measured in months of full PITI payment.
The portion of a home's purchase price the buyer pays out of pocket up front, with the mortgage covering the rest.
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