How to Buy a Second Home

Learn About the Different Loan and Financial Requirements

There are lots of reasons you might want to buy a second home. Maybe that dream vacation house is finally within budget. You might want a rental or investment property. Perhaps the second house could become your new primary residence while renting out your current property. Many of the steps that were required to buy your primary residence will also be required to buy a second home. However, there are also significant differences you’ll want to understand before you get started.

Second Home Mortgage Choices

One difference between purchasing your primary residence and a second home is the type of mortgage for which you can apply. Most of the time, you’ll be limited to buying a second home with a Conventional loan. These are mortgages offered by private lenders without a guarantee from the federal government.

You can typically only buy a primary residence with a government-backed mortgage (VA, FHA, and USDA loans). This means you can’t buy a second home with these mortgages (in most cases).

Financial Requirements for Buying a Second Home

Lenders often have higher credit, income, and financial requirements for approving a mortgage application to buy a second home, compared to buying a primary residence. That’s because mortgage companies view lending money to buy a second home as a greater financial risk.

As a result, many lenders charge higher interest rates for second homes and require higher minimum down payments, as well as higher minimum credit scores. They also have maximum debt-to-income ratio (DTI) requirements you’ll need to meet. DTI is a percentage you’ll get by dividing your total monthly debt payments by your gross monthly income. Many lenders have a maximum DTI of 43% for Conventional loans.

If you’re buying a second home while still making monthly mortgage payments on your primary residence, the cost of both mortgages will be included in your DTI. Look at this sample calculation:

In this example, the applicant has a DTI under the 43% maximum that lenders might use. Knowing your DTI is important, because it affects whether or not you may qualify for a mortgage to buy a second home. It can also help you understand how much money a lender might be willing to loan you for a second home.

Benefits and Costs of Investment and Rental Properties

Let’s suppose you are buying a second home as an investment or rental property. In that case, it’s a good idea to look at the potential income you might earn from these properties, as well as the potential costs of owning, maintaining, and managing them. Consult a real estate professional to help you estimate the benefits and costs. Then, work with a financial professional who can help you understand how buying a second home fits into your overall finances.

Lenders often have different requirements for approving mortgages for second homes that are used as rental or investment properties. Learn more about mortgages for investment and rental properties.

Buying a Second Home as Your Primary Residence

There is one circumstance where buying a second home with a government-backed mortgage may be possible, which is when you intend to occupy the property as your primary residence. It’s good to remember that in most cases, you’ll be limited to having one VA, FHA, or USDA loan at a time.

This means that if you bought your current home with a government-backed mortgage and are still paying off that loan, you are unlikely to qualify for a new, government-backed mortgage to buy a second home. Conventional loans do not have these restrictions. You can often qualify for more than one Conventional loan at a time.

Last reviewed and updated September 2025 by Freedom Mortgage.