Primary Residence vs Second Home Mortgage
Mortgage programs distinguish between primary residence (where you live most of the time), second home (vacation/getaway, occupied part-time), and investment property (rented out). Each has different down payment, rate, and occupancy rules. The classification matters at origination - mis-stating occupancy is mortgage fraud.
Primary Residence
Home you live in most of the year - the most favorable mortgage terms.
Best for: Your main home where you spend most of the year.
Pros
- +Lowest rates and best pricing tier
- +Lowest down payment (3% conventional, 3.5% FHA, 0% VA)
- +Mortgage interest deductible (subject to $750K cap)
- +Eligible for Section 121 capital gains exclusion at sale ($250K single / $500K married)
Cons
- −Must occupy as primary residence (60+ days/year typical lender rule)
Second Home
Vacation home or part-time residence, not rented out.
Best for: Vacation property you use personally; not rented as an income-producing asset.
Pros
- +Better rates than investment property (~0.5% premium over primary)
- +Some flexibility on occupancy (no minimum days requirement)
- +Can refinance like primary residence
Cons
- −10% minimum down payment typical
- −Rate premium 0.25-0.5% over primary
- −Cannot claim Section 121 exclusion (only one primary residence)
- −No rental income use case (would force investment property classification)
| Field | Primary Residence | Second Home |
|---|---|---|
| Min FICO | 580+ FHA, 620+ conventional | 660+ |
| LTV (purchase) | Up to 97% conventional, 96.5% FHA, 100% VA | Up to 90% |
| LTV (cash-out) | Up to 80% | Up to 75% |
| Income docs | Standard | Standard |
| Term | 30-year fixed, 15-year, ARM | 30-year fixed, ARM |
| Time to close | 30-45 days | 30-45 days |
Which one should you choose?
- Primary Residence: choose primary residence classification if you live in the home most of the year. Lowest rate and down payment.
- Second Home: choose second home if you have a vacation property you use personally and don't rent out.
- If you plan to rent the home occasionally, you may need to classify as investment property (different rate/LTV). Mixed-use scenarios are complicated - work with a CPA on tax implications.
Frequently asked questions
Can I rent out a second home occasionally?
Some occasional rental is permitted under second-home rules - typically up to 14 days/year before IRS requires investment property reporting. Lenders also have occupancy rules; consistent rental triggers investment property classification.
How does the lender verify second home occupancy?
Initial occupancy at close, then through utility records, address verification, and ongoing primary-residence indicators. Lenders typically don't actively re-verify but can if anomalies trigger review.
What's the difference between second home and investment property?
Second home: you use it personally and don't rent for income. Investment property: rented to tenants, generating income. Investment property has higher rate (~1% above second home), 20-25% down, and DSCR or full income docs required.
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Related
Foreign National
Foreign national mortgages for non-US-resident buyers of second homes and primary residences. No US credit, no US tax returns, qualify with reserves.
FHA vs Conventional
FHA or conventional mortgage? Compare down payment, FICO, MIP/PMI, loan limits, and which fits your scenario as a homebuyer.
Today's mortgage rates
Conventional
6.250%
6.288% APR
FHA
5.750%
5.780% APR
VA
5.750%
5.780% APR
Conv: 80% LTV, 780 FICO. FHA: 96.5% LTV, 680 FICO. VA: 100% LTV, 680 FICO. 30-yr fixed. Your rate may vary.