Lenders consider a home to be a second home if it is something you will use personally, such as a vacation property. A Non Owner Occupied property is a home that will be used for investment purposes, such as a rental property.

Most lenders will look at the location of a second home to see if the location makes sense for its intended purpose. In other words, if you buy a home thats 10 miles away from your primary home, you will probably not find a lender that will consider that a second home. Many lenders will lend up to 100% of the purchase price of a second home. The rate you will pay will probably be slightly higher than your primary residence.

For Non Owner Occupied homes, there are some lenders that will lend up to 100% of the purchase price of the home, but the interest rate you will pay will probably be considerably higher than your primary residence.

Some lenders will consider the property as a second home only if the property is located at a resort site or vacation site.

Non-owner occupied homes or rental properties generally have much tougher qualifying factors and higher interest rates than 1st and 2nd homes. If you own a home that is on the same street as your current home and you let your son/daughter live there for free this would still not be considered a second home. Even though you do not rent out the home to anyone the location is still too close to be considered a second home and the home is still considered an investment property. Second home financing is very similar to normal first home financing.

If you already own multiple investment properties, it may be difficult for you to purchase a "second home". While you will still be able to purchase the new home, the lender may consider it a investment property simply because of the number of existing investment properties you own. Other lenders will require a very good explanation as to how this new home is different than your existing investments to ensure you are not trying to commit fraud by lying about the occupancy status.

 

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