Looking for some feedback from the pros. What are the basic parameters for financing on a 2nd home? Down payment? Tenor? Rate (relative to primary home)? Anything else to consider?

10% down minimum. 25 is best

Rate about same as primary

No rental income allowed.

Needs to be a vacation home ie a destination from your current home. Rule of thumb 35-45 miles from your current home. Specifics matter here.

Contact info in my profile. Done many over 20 years in CS.

What type of property are you looking for? A lot of people are looking at condo's on a second home and the can be radically different then a single family home to finance especially if they are in resort areas.

Definitely looking at single family in B/CS.

Another tidbit I'm curious about. Ideally, this would be a second home for a couple of years, but would eventually be primary residence. Currently live in DFW, but our youngest will be graduating high school next year. Figure we'll give him a couple of years before selling here and moving there permanently. I guess nothing to do with that other than payoff (if possible) or refinance when it switches to primary residence.

You will not need to refi. If rates stay low like today no need.

Recently bought in resort area of Florida. Put 25% down. Got 5.25% over 30yrs.

SteveBott said:

---

10% down minimum. 25 is best

Rate about same as primary

No rental income allowed.

Needs to be a vacation home ie a destination from your current home. Rule of thumb 35-45 miles from your current home. Specifics matter here.

Contact info in my profile. Done many over 20 years in CS.

---

Just a quick question here, if it needs to be a 'destination' and also 35-45 miles from your current home-who is buying these homes under these terms? You're practically already at your destination.

Yes, who the hell is buying a vacation/second home less than 45 miles from their primary residence.

If you live in Austin for example, not uncommon to have a second home on Lake Travis or Dallas and have a place on Cedar Creek lake etc.

Jay's answer is correct. Most second homes are lake/beach houses. But I've done homes in B/CS for football use.

At the end the decision is up to an underwriter. Does this deal make sense?

SteveBott said:

---

10% down minimum. 25 is best

Rate about same as primary

No rental income allowed.

Needs to be a vacation home ie a destination from your current home. Rule of thumb 35-45 miles from your current home. Specifics matter here.

Contact info in my profile. Done many over 20 years in CS.

---

What if you don't intend on renting it out, but after a couple years you start renting it once in a while?

From listening to a lot of bigger pockets podcasts they make it sound like with the 10% down vacation loan you can't do a long term rental contract but can do short term rentals as long as you stay there a couple weeks a year. Is that wrong? Or a different product?

I live in Austin, 2nd home/vacation home on LBJ about 1 hr away. Best vacation spot is when its about 1 hr away.

Close enough to go anytime you want, little packing, come back to town if really needed, far enough where no one bothers you/feel like you are actually away, families/friends can come/great memories for the kids.

If I had one in Port A, we would go 2 times at most a year and kids would get bored b/c their friends/cousins can't come.

Anyone with kids know that they get bored easily but if they have friends, you would think it was their favorite vacation.

I just recently closed on a 6-700K home needing 130K down. I made 1.5-2M in 2020 & 2021 all K1/1099, have 200K cash in the bank, 5M+ real estate equity, 2M+ in business equity, 1+M in retirement, High FICO, Not one ding on my report, Rental easily pays for all the carrying costs, zero business debt, only debt from rental properties with a debt:value ratio of 25%. Use the same broker for my past 10 properties and have a great relationship.

You would think by the stuff they needed from me, I was some homeless guy who just came off the streets. If I made 200K W2, it would have been a piece of cake.

Things I had to produce
1. CFO had to write a letter that my large deposits were legit and I actually made it form my business
2. I had to write a letter explaining all of my bank accounts and how/where the money was flowing from
3. Sign a form saying that have right of use on my kids accounts that I set up for them (they are all under 13)

System is messed up for sure but I understand why they require all of this but you would think someone just pulling up my 1040 returns, credit score, proof of down payment would be enough.

I don't see how any lender would know or even care. If you pay it down monthly, they can care less.

I know huh....rich people problems.

I owned a 2nd home in BCS while living in DFW. Would be happy to discuss. There are multiple options for you.. I am also a mortgage Loan officer and Happy to help. Also, you might check out Red Pear Realty and get 2% back. Bbazar@rpm-mtg.com. NMLS 1969754