2016 Fannie Mae Second Home Guidelines requires that potential buyers of second homes put at least a 10% down payment on this home purchase. Fannie Mae is going to be one of the few options you have for financing a second home as financing for second homes is not allowed by FHA, VA, and USDA Loans. Per the rules and regulations of government loans, these loans are only approved for owner occupied primary residences. Fannie Mae along with Freddie Mac are the two mortgage giants and government sponsored entities who set the rules and mortgage lending guidelines for conventional loans. In this situation, conventional loans do allow for second home financing as well as investment home financing. There is a difference between the second home purchase and investment home purchase financing and it is that mortgage rates are much lower for second home financing than investment home financing. On average, you are going to see an interest rate of at least 0.50% – 1.00% higher for the investment home than the second home purchase. Another difference between these two products is per 2016 Fannie Mae Second Home Guidelines second home financing only requires 10% down payment while investment home financing requires a 15% down payment. Additionally, all conventional loan programs require that a potential borrower have at least a 620 FICO credit score and adhere to all conventional mortgage lending guidelines.
We touched on a few of these items earlier, but we will go through them a little more here. 2016 Fannie Mae Second Home Guidelines say just because you have 10% minimum down payment for a second home purchase does not mean that you can qualify for second home financing. Fannie Mae and Freddie Mac have specific rules and requirements as seen in the 2016 Fannie Mae Second Home Guidelines that need to be met in order to get approval. In addition to what we went over, the second home purchase cannot be that close to your current home. In fact the second home purchase needs to be at least 100 miles away from your current home. If you would like to buy a second home that is less than 100 miles away you can, however the home will need to be treated as an investment property and must abide by those guidelines. The only way you can get around the distance requirement per the 2016 Fannie Mae Second Home Guidelines, is if the second home is a waterfront property or is located at a resort. So if you live within an hour or two from a body of water and want to purchase a second home, you can be fairly certain that even if the property is less than 100 miles from your current home, it should still be approved by 2016 Fannie Mae Second Home Guidelines.
If you are in the market for a second home and want to ensure you can get financing for this purchase, you need to reach out to me and I can get you a solid pre-approval so you can shop wisely. Please feel free to call me at 888-900-1020, email me at firstname.lastname@example.org, or vist www.loanconsultants.org to apply today!