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Compare second home mortgage rates

On Friday, March 01, 2024, the national average 30-year fixed mortgage APR is 7.31% 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.

National mortgage rates by loan type

Product Interest Rate APR
30-Year Fixed Rate 7.30% 7.31%
15-Year Fixed Rate 6.70% 6.73%
5-1 ARM 6.31% 7.39%
30-Year Fixed Rate FHA 6.39% 7.06%
30-Year Fixed Rate VA 6.64% 6.75%
30-Year Fixed Rate Jumbo 7.32% 7.34%

Rates as of Friday, March 01, 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.

How to qualify for a second home mortgage

Your second home has to be used as a residence in order to qualify for a second home mortgage — it can’t be an investment or rental property. Investment properties come with stricter mortgage requirements, and are also taxed differently than second homes.

Similar to the mortgage on your primary residence, your credit, income, employment history and other factors need to meet the lender’s requirements. As early in the process as possible, review your credit report to check for errors or ways to improve your score. If you can, work on paying down debt — this can boost your credit and help you qualify for a bigger mortgage.

Here are some of the most common requirements for a second home mortgage:

  • Credit score: 660 or higher
  • Down payment: 10% or more
  • Debt-to-income (DTI) ratio: 45% or less

Depending on where your second home is located, your lender might also require flood insurance.

When you’re ready to shop for a second home mortgage:

  • Calculate affordability. Before buying, think about your budget and whether you can afford a second set of maintenance costs, insurance and other expenses.
  • Find the best rate. Shop around to find the lowest interest rates. Be sure to compare the lender fees on each loan option.
  • Get preapproved for a mortgage. A preapproval will suggest the amount you qualify for, and you’ll need this when you go to make offers on homes.

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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Recent Customer Reviews

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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

1060reviews

Pros and cons of a second home mortgage

Pros of second home loans

  • You can deduct the interest and property taxes. 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 “qualified” second homes, 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.

Second home mortgage FAQ