Compare Today's Second Home Mortgage Rates

What is a second home mortgage?

A second home is sometimes called a vacation home, and a second home mortgage is the loan you use to buy one, or to refinance the loan on one. When you have a primary residence, plus another home where you regularly spend time, the other residence is a second home.

From a lender's perspective, a property counts as a second home if:

• It's a single-family residence where you stay for some portion of the year.

• You have exclusive control over it, deciding who stays there, when and for how long.

• It's suitable for year-round occupancy.

• It's not a timeshare, nor does a management company control occupancy.

• You don't rent it out year-round, and you don't use any rental income to qualify for the mortgage.

The requirements are both vague and specific, so let's dig in a little deeper. How long is "some portion of the year"? Well, for the Internal Revenue Service — yes, the IRS — it's 14 days. Rules governing deductions for rental property income also govern what's considered a vacation home versus a rental property. If you reside in the home for at least 14 days during the year, or for more than 10% of the time the property is rented, it's a vacation property.

Beyond what type of home loan you can use to buy the property, this distinction has substantial tax implications. If you're considering buying a second home that you sometimes rent out, you'll probably want to consult a tax pro to understand how the numbers could play out.

If you rent the place out year-round or use rental income to qualify for the mortgage, a lender is likely to consider it an investment property instead of a second home. Investment properties often require bigger down payments, higher credit scores and more cash reserves, and have higher mortgage interest rates than loans for second homes.

How to find today's second home mortgage rates

NerdWallet’s mortgage comparison tool can help you find competitive second home mortgage rates. Enter details about the loan you’re looking for, and you can see rate quotes without providing personal information.

You may find that specifying a larger down payment in the mortgage comparison tool will yield more rate quotes.

How second home mortgages are different

In general, mortgages for second homes require bigger down payments than mortgages for primary residences. To be eligible for purchase by Fannie Mae or Freddie Mac, a second home must have a down payment of at least 10%. But lenders can, and often do, require even bigger down payments than Fannie and Freddie require.

Fannie and Freddie charge higher fees on second home mortgages. Instead of requiring these fees to be paid upfront, lenders usually build the fees into their interest rates. As a result, mortgage rates on second homes tend to be higher.

In most scenarios, you can't buy a second home with a government-backed loan. FHA loans and VA loans are intended to be used for primary residences — someone who is on the mortgage needs to occupy the home year-round.

Using home equity to buy a second home

If the lender requires a big down payment on a second home, you might be able to tap the equity in your primary home to come up with that sum. This would entail borrowing against the equity in your primary residence with a home equity line of credit or home equity loan.

The lender for your second home will require you to show that you can afford to pay all of your debts: the mortgage on the primary home, the home equity loan or credit line and the mortgage on the second home. It's also vital to recognize that borrowing against your home equity puts your primary residence at risk, because if you find yourself unable to pay the loan, your home is the collateral.

Learn more about financing second homes:

• What to Know About Buying a Second Home

• How and Why to Use a HELOC

• Buying an Investment Property