Investment Property or Second Home

4 Replies

Hello BP friends-


My husband and I are just getting started on our investing journey and let me start by saying we are so thankful for each and everyone on here who shares their wisdom in articles and posts. 

As part of our first step to get started on the right foot we want to lower our expenses as much as possible, which is why we are currently in the process of refinancing our home in TX. I have been trying to find the answer to my question but was only able to find general answers that didn't apply to our specific situation. So I figured why not reach out to the BP members.

My husband and I are currently in the process of refinancing our former primary residence in TX (conventional loan) and are unsure whether we need to refinance it as a second home or an investment property.


More about our situation:

We have lived in the home for 2 years and had a job related move to Ohio about a year ago. Our home in Texas is now occupied (rent free) by my husband's parents, whom he is supporting financially.

As we have been speaking to lenders we have received quite different rates and terms, which did not seem within the common range. We realised that was due to the lenders either considering the the property as an investment or a second home/vacation home. So here is my question: Does it depend on the lenders policy whether it is considered one or the other or is there only one correct answer but they just haven't asked or we have not provided specific enough questions to determine the correct category.


Hoping someone can shed some light on this so that going forward we'll be able to attain effective lender quotes to compare.

Thank you everyone! :)

Even better: Some lenders will be willing to count it as a primary residence if you're providing housing for elderly parents that cannot support themselves. 

Originally posted by @Gina Rutigliano :

Hello BP friends-

My husband and I are just getting started on our investing journey and let me start by saying we are so thankful for each and everyone on here who shares their wisdom in articles and posts. 

As part of our first step to get started on the right foot we want to lower our expenses as much as possible, which is why we are currently in the process of refinancing our home in TX. I have been trying to find the answer to my question but was only able to find general answers that didn't apply to our specific situation. So I figured why not reach out to the BP members.

My husband and I are currently in the process of refinancing our former primary residence in TX (conventional loan) and are unsure whether we need to refinance it as a second home or an investment property.


More about our situation:

We have lived in the home for 2 years and had a job related move to Ohio about a year ago. Our home in Texas is now occupied (rent free) by my husband's parents, whom he is supporting financially.

As we have been speaking to lenders we have received quite different rates and terms, which did not seem within the common range. We realised that was due to the lenders either considering the the property as an investment or a second home/vacation home. So here is my question: Does it depend on the lenders policy whether it is considered one or the other or is there only one correct answer but they just haven't asked or we have not provided specific enough questions to determine the correct category.

Hoping someone can shed some light on this so that going forward we'll be able to attain effective lender quotes to compare.

Thank you everyone! :)

 Hi Gina, I am involved in a similar situation with my parents. I would ask the lenders about the Family Opportunity Loan. I would also chat with your accountant to see which "classification" would be best, so you can get some tax breaks. 

@Gina Rutigliano this is a great question. So doing research I found a few notes (just cause not sure what kind of loan you have). 

VA, FHA, and USDA will probably not let it go through because they do want it to be your actual personal primary residence. If you dont occupy it at the time of the application they ask if you travel for work or if you are in military, if you will live there more than 2 weeks per year, and if you own another primary residence (and then it rejects it if you answer yes).

Fannie and Freddie will both allow it as a primary residence with a letter of explanation. You will just have to keep looking for a lender that is willing to learn what is allowed for your particular situation. Most of the time it is just a matter of there being too much to understand and they are telling you something based on what they think the underwriter will say and not what the underwriter will actually allow. Just keep looking for a broker/lender that will do the research and go to bat for you with an underwriter (I would but I dont carry a license for TX).

The LOX must outline the following:
  • Relationship between the client and person who will be occupying the home.
  • If the person is financially able to qualify on their own.

Thank you so much to each one of you for taking the time to help us out. It’s much appreciated.

We have actually been able to refinance it as a primary residence now because of three main factors:

1. the job related move to Ohio is intended to be temporary.

2. we plan on moving back to Texas in the future.

3. We don’t own a primary residence in Ohio.

The family opportunity mortgage program however is a great option that we had not been aware of. Definitely gave me confidence talking to lenders because I knew even if the conventional way did not work out, we'd have another great alternative route to pursue.

Thank you for your advice @Greg Dorn , @Zeke Liston , @Chris Mason