The ins and outs of buying a second home

Vacation home financing has become a hot topic at Key Mortgage. We have licensed loan officers in popular weekend getaways states like Florida, Wisconsin, Michigan, and Indiana. Who hasn’t dreamed of a second home in Lake Geneva, New Buffalo, Michigan City, or Naples?

Financing a vacation property differs from a primary residence so we figured we’d give you the ins and outs (whether it’s to guide your clients or yourself). To start, only conventional financing is available, meaning FHA and VA programs are out.  

What qualifies as a second home?

The home must be occupied by the borrower for a portion of the year and be suitable for year-round occupancy. It can’t be a timeshare or a property that gives outside management control over the property’s occupancy. The property must also be a one-unit dwelling and the borrower can’t use rental income to qualify.

What are vacation home loan requirements?

  • Downpayment: There are some programs available at 5% but they are rare — figure you or your client will need around 10-15% or more.
  • Credit Score: This is typically around 640.
  • DTI: The debt-to-income ratio should be around 43% or a touch higher.
  • Rate: Rate varies based on location, credit, down payment and more. Reach out to your loan officer for specifics.

To learn more about getting your clients financing for a second home, reach out to a Key Mortgage loan officer today. Want to know who can help you in one of our licensed states? You can just click on this link!

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