Second Home vs. Investment Property

Lenders treat these as two completely different products. A second home must be:

  • Occupied by you for some portion of the year
  • A reasonable distance from your primary residence (usually 50+ miles, though this varies)
  • Suitable for year-round occupancy
  • Not subject to any rental or timeshare agreement that requires you to rent it out

If you intend to rent it more than incidentally, it's an investment property — and the loan terms get tougher.

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Second Home or Investment?

These are legally and financially different products. Get the classification right up front — saying "second home" and then renting it out can be occupancy fraud.

Down Payment and Rate

  • Second home: 10% minimum down on Conventional; 15% for jumbo. Rates ~0.25–0.50% higher than a primary residence loan.
  • Investment property: 15–25% down typical. Rates 0.50–0.875% higher than primary.

In 2021, Fannie Mae and Freddie Mac added loan-level price adjustments for second homes, which raised pricing by roughly half a point. That gap remains today.

The Occupancy Affidavit

At closing you sign an affidavit stating you'll occupy the home as a second home. If you turn around and put it on Airbnb full-time, you may have committed occupancy fraud — a serious issue. If you intend to short-term rent, just say so up front and apply for an investment property loan.

10%
Second home min down
15–25%
Investment min down
75%
Of rent counted as income
0.5%+
Rate premium vs primary

Counting Rental Income

For investment properties, lenders will count 75% of expected rental income toward your qualifying income (the 25% haircut covers vacancy and maintenance). Sources of "expected rent":

  • The appraiser's Form 1007 market rent estimate
  • Existing lease if the property is tenant-occupied
  • Two years of Schedule E income for properties you already own

Insurance for Florida Second Homes

Insurance is the single most underestimated cost. A coastal Florida second home may require:

  • Homeowner's policy (sometimes through Citizens if private market declines)
  • Separate windstorm policy
  • Federal flood insurance (NFIP) — required if in a flood zone
  • Excess flood policy for higher-value homes

Annual premium can easily top $8,000–$15,000 on a $700K coastal condo. Get quotes before you go under contract.

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Florida HOA Rental Restrictions

Many Florida condo HOAs have rental minimums (30 days, 60 days, even "no rentals year one"). If your financing depends on rental income, verify the HOA rules before going under contract.

HOA and Condo Issues

Many Florida condo HOAs restrict rentals — minimums of 30 days, 60 days, or even no rentals in the first year of ownership. If your financing strategy includes rental income, the HOA rental rules must support it. We've seen deals collapse 48 hours before closing when the HOA rental restriction came to light.

Buying in Florida from out of state? We close in all 67 counties.

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