Current Second Home Mortgage Rates

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	7.37%	7.42%
15-Year Fixed Rate	6.73%	6.81%
5-1 ARM	6.58%	7.89%
30-Year Fixed Rate FHA	7.30%	7.34%
30-Year Fixed Rate VA	7.36%	7.40%
30-Year Fixed Rate Jumbo	7.40%	7.45%

Rates as of Thursday, May 02, 2024 at 6:30 AM

Product	Interest Rate	APR
30-Year Fixed Rate	7.38%	7.42%
15-Year Fixed Rate	6.77%	6.84%
5-1 ARM	6.53%	7.85%
30-Year Fixed Rate FHA	7.29%	7.33%
30-Year Fixed Rate VA	7.88%	7.90%
30-Year Fixed Rate Jumbo	7.43%	7.48%

Rates as of Thursday, May 02, 2024 at 6:30 AM

Bankrate displays two sets of rate averages that are produced from two surveys we conduct: one daily (“overnight averages”) and the other weekly (“Bankrate Monitor averages”).

For Bankrate’s overnight averages, APRs and rates are based on no existing relationship or automatic payments. To determine the Bankrate Monitor mortgage rate averages, Bankrate collects APRs and rates from the 10 largest banks and thrifts in 10 large U.S. markets based on no existing relationship or automatic payments.

Our advertisers are leaders in the marketplace, and they compensate us in exchange for placement of their products or services when you click on certain links posted on our site. This allows us to bring you, at no charge, quality content, competitive rates and useful tools.

Learn more about Bankrate’s rate averages, editorial guidelines and how we make money.

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.

Lender

Garden State Home Loans

NMLS: 473163

|

State License: MB-473163

3.6

Bankrate Score

Bankrate scores are objectively determined by our editorial team. Our scoring formula weighs several factors consumers should consider when choosing financial products and services.

Bankrate's take

Garden State Home Loans doesn’t solely work with borrowers in New Jersey; it also lends in a handful of other states, including Florida, New York, Pennsylvania and Texas. While that limits who can work with this lender, if you’re in one of its operating states, Garden State can be a smart choice if you’re looking for dedicated service — including a loan officer available nights and weekends — and swift closings.

Loans offered

Conventional, jumbo, FHA, VA, USDA, refinancing and more

Min. credit score required

Nationwide availability

Connecticut, Delaware, Florida, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Pennsylvania, Tennessee, Texas and Virginia

Min. down payment

3% for conventional loans, 3.5% for FHA loans, none for VA loans or USDA loans

Recent Customer Reviews

5.0

562reviews

Read full lender review

Lender

Homefinity

NMLS: 2289

|

State License: 4965

4.5

Bankrate Score

Bankrate scores are objectively determined by our editorial team. Our scoring formula weighs several factors consumers should consider when choosing financial products and services.

Bankrate's take

Homefinity is an imprint of Fairway Independent Mortgage, one of the top five mortgage lenders in the U.S. It offers many of the perks of an online lender, including up-to-the-minute rates and calculators to help you estimate your homebuying budget, refinance savings and more. It employs a smaller team of loan officers, but one that promises a fast, convenient process. If you’re a medical professional, this lender can help you get financing for your unique financial situation, too.

Loans offered

Conventional, jumbo, FHA, VA, USDA, refinancing and more

Min. credit score required

Nationwide availability

All U.S. states except Nevada and New York

Min. down payment

3% for conventional loans, 3.5% for FHA loans, none for VA loans or USDA loans

Recent Customer Reviews

4.9

1064reviews

Read full lender review

Second home mortgage FAQ

Second home mortgage rates are based on a variety of factors, including the borrower's creditworthiness, the loan-to-value (LTV) ratio, the loan amount and the term of the loan, the property type and overall market conditions. Here’s how each factor weighs in:
- Creditworthiness: A higher credit score and a lower debt-to-income (DTI) ratio yield a better interest rate. For a second home mortgage, you’ll typically need a credit score of 660 and a DTI of 45 percent or less.
- Loan-to-value (LTV) ratio: The LTV is the ratio of the loan amount to the appraised value of the property. A lower LTV indicates a lower risk for the lender, which can lead to a lower interest rate. Second-home lenders typically prefer a lower LTV, ideally below 80 percent.
- Loan amount and term: The amount and length of the loan also affect the interest rate. Higher loan amounts and longer terms can translate to higher interest rates.
- Property type: Not all properties are created equal in lenders’ eyes. Some condos and co-ops can be difficult to finance, for example. If it’s a property you plan to lease out, the lender might also consider rental income it generates.
- Market conditions: Mortgage rates are influenced by the state of the economy and financial markets (especially yields on 10-year Treasury bonds), the Federal Reserve's monetary policy and market demand. Obviously the larger trends are out of your control, but it pays to be aware of them.
A second home mortgage helps pay for a second home or vacation home. Unlike the mortgage for a primary residence — where you live most of the time — a second home mortgage typically requires a larger minimum down payment and has a slightly higher interest rate, and can have stricter requirements when it comes to cash reserves and debt-to-income (DTI) ratio.

A mortgage for a primary residence, for instance, might only require 3 percent or 5 percent down, while a second home mortgage might require at least 10 percent. In addition to that, you’ll likely need two to six months’ of reserves, depending on your credit and financial profile, to ensure you’re able to cover mortgage payments on both your primary residence and second home.

Your DTI ratio, meanwhile — which helps determine your ability to repay the loan — might max out at 43 percent, although some lenders cap it at 36 percent. On primary residences, there’s usually flexibility up to 50 percent.
You can refinance a second home mortgage, but as with any refinance, it’s crucial to ensure the savings outweigh the closing costs. Because interest rates are higher on a second home mortgage, it can take you longer to recoup these costs. You might also need more equity in your second home in order to refinance and, as with the initial loan, sufficient cash reserves.

Additional resources on second home mortgages

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.

Compare second home mortgage rates

Current second home mortgage rates

National mortgage rates by loan type

Why trust Bankrate’s mortgage rates

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

Should you get a second home mortgage?

Pros of second home loans

Cons of second home loans

How to get a second home mortgage

Compare mortgage lenders side by side

About the Lender

About the Lender

Second home mortgage FAQ

How are second home mortgage rates determined?

What are the differences between mortgages for a primary residence and a second home?

Can you refinance a second home mortgage?

Additional resources on second home mortgages

Meet our Bankrate experts

Mortgage rates in other states