Instead of dealing with renting a home while on vacation or frequenrly visiting an area, consider buying a vacation home to go to on weekends, holidays or during the winter or summer seasons. Perhaps you want to live in the home when you retire.
Do you have the required down payment?
There are down payments as low as 10-percent for a vacation home (second home) for those with excellent credit scores and income verified the traditional way.
Are you able to afford a second home mortgage?
While some lenders programs allow you to rent the property for part of the year, the rental income cannot be used to qualify. You must be able to qualify based on your income and / or assets.
Is your income stable and do you have the necessary cash reserves?
It is not unusual for lenders to require borrowers to have 6-12 months of mortgage payment in reserves.
Are you comfortable with the extra costs associated with owning a second home?
Similar to owning a rental property, you will incur additional costs of ownership such as repairs, furniture, HOA fees, and property-management fees, and these will be your responsibility.
Know your second home mortgage choices
You can easily get pre-qualified or pre-approved for a loan prior to searching for properties.
Available loans are 5/1, 7/1, 10/1 ARMs and 15- and 30-year fixed rates.
Eligible property types for financing are similar to a primary residence; detached homes, attached homes, condos, condotels and resort area condos.
A loan with traditional documentation such as two years of W2's, tax returns, and bank statements offers 90-percent financing.
A loan using a different form of income documentation may require just 10-percent down. These are offered on either the bank statement mortgage (12 or 24 months of statements) or asset-only based (6 months of liquid asset statements) based programs.
Below is an example of why someone would consider doing this in Saint Augustine, FL
Airbnb or VRBO Rental Income: $2,760
Traditional Rental Income: $1,890
As one might expect, the best locations with the largest share of second homes are mostly in tourist destinations. Some of the best markets for a vacation home are listed below. Being that the property is in a tourist destination, some may want to AirBnb their home out or use VRBO.com.
Areas in the U.S. that are popular for owning a vacation home where we are licensed are:
Alpine County, Napa, Palm Desert, Palm Springs, Rancho Mirage, Indio, Los Angeles, Laguna Niguel, La Jolla, Port Hueneme, Santa Barbara, Fairfield, Lake Tahoe.
Counties: Eagle, Mineral, Hinsdale, Pitkin and Summit counties. Cherry Creek, Breckenridge, Dillon, Frisco and Silverthorne, Keystone, Ridgeway, Telluride, Aspen, and Basalt.
Counties: Lee, Broward, Miami-Dade, Pinellas, and Collier this includes the cities of Fort Myers, Cape Coral, Bonita Springs, Marco Island, Naples, Miami, Fort Lauderdale, Hollywood, Tampa, St. Petersburg, Clearwater Beach, Venice, Santa Rosa Beach, Destin, Satellite Beach St Augustine, Madeira Beach, Ponte Vedra Beach
Austin, Dallas, Galveston, Montgomery.