Turn Your Dream of a Vacation Home Into a Reality

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Ever been on a relaxing vacation watching a glorious sunset and wished you could own your own vacation home? If so, you are not alone. According to the National Association of Realtors Vacation and Investment Home Sales: A breakdown for 2017, thousands of buyers felt the same way and turned their dreams into a reality.vacation home

Financing a vacation home

There is a misconception that vacation home buyers pay in cash or have a large down payment. NAR cites that 72% of homebuyers purchasing a vacation property financed their purchase. Of those financing, the majority put down 30% or less as a down payment.

Conventional loans are the most common loans used when financing a vacation home. Your minimum down payment is often determined by the way you intend to use your vacation home. If you plan on using your vacation home as a personal or family retreat then lenders will classify your property as a second home. In this case, they may require as little as 10% down. If you plan on renting your property during the times you are not there then the lender may classify your home as an investment property. Lenders typically require at least a 20% down payment on investment property. If your vacation property within 50 miles of your primary residence, lenders may also classify it as an investment property.

Owning a vacation home

Another misconception about purchasing a vacation home is that only households with six figure incomes can afford a vacation home. It may surprise you to learn that the median household income for vacation home buyers in 2016 was $89,900. By taking advantage of renting your vacation home and treating it as an investment property, lenders can count up to 75% of the anticipated rent as income to supplement your existing income. To determine the property’s potential rental income, lenders will request an appraisal with a comparable rental schedule.

Owning a second home may provide the ultimate getaway for you and your family. It also means you have double the responsibilities that come with owning a home including property taxes, insurance, utilities, maintenance and repair costs. There is also the cost of transportation to and from your vacation home to consider.

Once you have determined that a vacation home is financially manageable it’s best to consult with local realtors and lenders. They may advise you on local zoning and property rental rules as well as all lending options that may apply.


FDICThe information voiced in this material is for general information and is not intended to provide specific advice or recommendations for any individual.

All loans subject to credit approval.