Lenders classify a home you don’t live in full time as either a second home or an investment property, and the label changes your down payment and rate. Second homes (that you use yourself part of the year) often need 10% down at rates close to a primary home. Investment properties (rented out) usually need 15% to 25% down at higher rates. Calling a rental a second home to get better terms is mortgage fraud.
How lenders tell the difference
| Second home | Investment property | |
|---|---|---|
| Who uses it | You, for part of the year | Tenants |
| Units | One unit | One to four units (or more with commercial loans) |
| Typical down payment | 10% | 15% (1 unit) to 25% (2 to 4 units) |
| Rate | Slightly above primary | Noticeably higher |
| Rental income to qualify | Usually not counted | Part of the rent can count |
| Seller concession limit (conventional) | Same as primary: 3% to 9% | 2% |
Second home rules
- You must occupy it some of the year and keep control of it.
- It generally can’t be run as a full-time rental or by a management company that controls occupancy.
- Lenders may look for reasonable distance from your main home, such as a vacation area.
- Occasional short-term rental may be allowed, but rental income usually isn’t used to qualify.
Investment property rules
See buying an investment property for financing options, including DSCR loans that qualify on the property’s rent, and check the numbers with the DSCR calculator and the rental yield finder.
Try it: Mortgage payment calculatorCompare the payment at second-home and investment rates and down payments.Qualifying for two homes
Your debt-to-income ratio includes both housing payments, and lenders often want several months of reserves for each property; see reserves and the debt-to-income calculator.
Common questions
How much down for a second home?
Often 10% with a conventional loan.
Can I rent out my second home?
Occasional rental may be allowed, but it can’t be run as a full-time rental; if it is, it’s an investment property.
Is it fraud to call a rental a second home?
Yes. Misstating occupancy to get better terms is mortgage fraud.
Updated October 2026. Educational content. OfferBacked is not currently a lender and doesn’t issue pre-approvals or loans.