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Compare second home mortgage rates

On Monday, May 27, 2024, the national average 30-year fixed mortgage APR is 7.13% according to Bankrate's latest survey of the nation's largest mortgage ... lenders. Use Bankrate's rate table to compare today's second home APRs.

Current second home mortgage rates

The rates on mortgages for second homes are higher than those for loans against primary residences because they’re a riskier prospect for lenders. If in financial straits, you’re much more likely to pay the mortgage on the home you live in than the one you vacation in or rent out, they figure. For context, the chart below shows current rates you could be quoted for a mortgage on a primary residence.

National mortgage rates by loan type

Product Interest Rate APR
30-Year Fixed Rate 7.08% 7.13%
15-Year Fixed Rate 6.54% 6.62%
5-1 ARM 6.61% 7.93%
30-Year Fixed Rate FHA 6.92% 6.96%
30-Year Fixed Rate VA 7.11% 7.15%
30-Year Fixed Rate Jumbo 7.17% 7.22%

Rates as of Monday, May 27, 2024 at 6:30 AM

 

 

What’s the difference between a second home and investment property?

The main difference between an investment property and a second home hinges on occupancy: If you personally live in the property for two weeks or less per year, you have a good case for classifying it as an investment, based on IRS guidelines. If you spend more than 14 days in the property each year, it’s a second home.

Should you get a second home mortgage? 

Whether to take out a second home mortgage is something of a personal choice. There are various ways to finance an additional property: You could tap the equity in your primary residence or borrow against your investments. Or of course, pay cash. If you have the means to do so, then the decision comes down to what kind of a deal you can get on a second home mortgage. If the rate and terms are attractive, then it might make more sense to take out the loan, rather than delete capital or savings.

As with any major financial decision, it’s important to weigh the pros and cons of a second home mortgage.

Pros of second home loans

  • You can get tax deductions. You can deduct the mortgage interest for both your primary residence and second home up to $750,000 total (or $375,000 if married filing separately). This applies only to a “qualified” second home, meaning you don’t rent it out, or you do rent it out but also use it yourself for a certain period of time each year. You can also deduct combined property taxes up to $10,000.
  • You can use your primary residence to help pay for it. You can take advantage of the equity in your primary residence to make a down payment on a second home, either through a cash-out refinance or home equity line of credit (HELOC). It might be better to do a cash-out if you know exactly how much money you need, can get a lower interest rate on your first mortgage and don’t plan to pay that first mortgage off anytime soon.

Cons of second home loans

  • It costs more. Generally, you can expect to have a higher interest rate on your second home loan compared to the one on your primary residence, so you’ll pay more in interest over time. You might also have a higher rate if you decide to refinance your second home mortgage down the line. Along with that, you’ll need to make a bigger down payment.
  • It can be harder to qualify for. Because the second home isn’t your primary residence, you’ll need to meet stricter credit and DTI ratio requirements.

How to get a second home mortgage

  • Get your finances in order: Well in advance of applying for a second home loan, take steps to grow and maintain your credit score, as well as plan for a down payment. Lenders tend to give the best rates to borrowers with higher credit scores, lower debt-to-income ratios and higher down payments.
  • Pay down debt: Before applying for a second home mortgage is a good time to pay off or pay down debts. Understanding and lowering your debt-to-income (DTI) ratio, which impacts whether you qualify and your interest rate, can result in a better mortgage offer. Lenders will want to know the full extent of your obligations — home loans, car loans, student debt, medical debt, as well as credit cards and personal loans. 
  • Compare rate quotes: When you’re ready to look for properties, get rate quotes from at least three mortgage lenders. You can try a wide variety of lenders, including local banks, online lenders and credit unions. Consider the loan’s APR, or annual percentage rate, which reflects both the interest rate and any lender fees and points. What’s more, read customer reviews and see if the lender has won any awards for customer service.
  • Complete the application and close: Once you’ve been preapproved, find the second home you want to buy and put in a good offer. If your offer’s accepted, choose the lender you want to go with and apply. You’ll need to go through underwriting and get an appraisal, like you did with buying your first home. Then, if all goes well, you can close on the property and get the keys to your property.

Lender compare

Compare mortgage lenders side by side

Mortgage rates and fees can vary widely across lenders. To help you find the right one for your needs, use this tool to compare lenders based on a variety of factors. Bankrate has reviewed and partners with these lenders, and the two lenders shown first have the highest combined Bankrate Score and customer ratings. You can use the drop downs to explore beyond these lenders and find the best option for you.

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Garden State Home Loans

NMLS: 473163

State License: MB-473163

3.6

Rating: 3.6 stars out of 5
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Rating: 4.98 stars out of 5

5.0

562reviews

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Homefinity

NMLS: 2289

State License: 4965

4.5

Rating: 4.5 stars out of 5
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Recent Customer Reviews

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Rating: 4.94 stars out of 5

4.9

1064reviews

Second home mortgage FAQ

Meet our Bankrate experts

Written by: Andrew Dehan, Writer, Home Lending

I’ve covered mortgages, real estate and personal finance since 2020. At Bankrate, I’m focused on all of the factors that affect mortgage rates and home equity. I enjoy distilling data and expert advice into takeaways borrowers can use. Prior to Bankrate, I wrote and edited for Rocket Mortgage/Quicken Loans. My work has been published by Business Insider, Forbes Advisor, SmartAsset, Crain’s Business and more.

Read more from Andrew Dehan

Troy Segal, Senior Editor, Home Lending

I’ve been writing and editing stories in the personal finance sphere for two decades, for publications like Business Week and Investopedia, covering everything from entrepreneurs to taxes. Since coming to Bankrate, I’ve concentrated on real estate, mortgages, renovations and other financial aspects of homeownership — helping people understand how a home isn’t just a place to live, but an investment that’s important to building and bequeathing wealth. 

Read more from Troy Segal