topic Re: Purchasing second home in Mortgage Loans

Purchasing second home

Anonymous — Tue, 06 Aug 2019 20:30:44 GMT

Hello all. Need some guidance as this particular process is new to me. I’ve owned primary residences before, but never a second (rental or otherwise) home. Plan is to purchase a home for my mom in FL near our primary residence. I spoke with one mortgage broker and was informed that as a secondary home the required down payment is 20%-25%. That sounded rather excessive, but being my first “rental/secondary” property I have nothing to compare it to. Anyone familiar with the process care to shed some light? Any mortgage brokers on the forum with experience? I’d prefer a smaller down payment as her moving costs, from out of state, will also be substantial.

To answer some preliminary questions: Yes, income can support a second home purchase, DTI <10%, Fico 8 818 TU and Fico 9 823 EQ (don’t know mortgage score yet). Safe to say scores hover 780+.

Re: Purchasing second home

NC_Mtg_Loaner — Tue, 06 Aug 2019 21:30:28 GMT

If it's truly a second home, FNMA and FREDDIE MAC only require 10% down.

If you are buying a home for your mom and it's going to be her primary residence, you may also qualify to purchase it as a primary residence as well.

Talk with a licensed loan originator.

Re: Purchasing second home

homeloanexpert — Thu, 15 Aug 2019 12:40:00 GMT

The term "Second Home" refers to a home other than your primary residence which you will occupy occasionally like a vacation home, future retirement home, etc. These types of purchases need to make sense. Such as be located in a recreational area i.e.near mountains, lakes, beaches, etc. or be at least an hour away from your existing home and be smaller so you can make the case that this will one day be your home once you retire. If you can't make that case, the lender will think you are an investor who will not occupy the residence therefore your average down payment will be 20% down. There are some Non O/C loan programs that have higher LTVs (up to 90%) but the rates are higher. Hope this helps clarify things for you.

Best wishes to you!

Re: Purchasing second home

Anonymous — Thu, 15 Aug 2019 21:33:01 GMT

Thank you both for the replies. They were rather informative, especially the 100 mile, beach type vacation home. This will be a home purchased under my name FOR my mother to reside in. It will be located within 10 miles of my preset primary residence (primary as depicted in my last tax return) and she will be living in it full time. Suspect I’ll have to look at Non O/C programs before the 20% down ones.

Re: Purchasing second home

NC_Mtg_Loaner — Tue, 20 Aug 2019 23:41:59 GMT

Like I said earlier, FNMA allows you to purchase this type of home and finance it as a primary residence--5% down is the minimum.