10% Down Second Home/Vacation Home Loan...Anyone seen this offered recently?

Question

Hey All,

Wondering if anyone has seen this out there in the last month or if anyone has a referral of any banks currently offering this loan option?

Jay Hurst · Answer

@Benjamin Giles    Any conventional lender should be able to do it. HOWEVER, your upfront fees will be hefty thanks to the loan level price adjustments (LLPA) on a 90% second home. LLPA's are more or less how much over a par rate. So, for 10% second home there is a 4.125% in negative adjustments.

Fannie Mae LLPA matrix

Jay Hurst · Answer

Well, like most things in this business, it is not really that simple.  But, assuming good credit your rate likely would be 8.%-8.25% but you would have to pay 2-3 points. and you would have mortgage insurance.

Derek Brickley · Answer

Hey Benjamin!  Do you have a purchase price in mind?  Those hefty fees as mentioned generally make 10% down near impossible in this rate environment, but there are certain brackets that might make it possible.

Glen Wiley · Answer

I haven't seen this lately but be careful and read the terms - there are often terms in the mortgage that preclude using the second home as an income property or limit the number of days you can be paid rent on it. Violating the terms of a mortgage is mortgage fraud and can be a real pain if it becomes an issue.

Benjamin Giles · Answer

Thanks Glen...looking at that chart it seems that the rate adjustments are the same for investment property and second home. Maybe it's better to go in designating it as investment property if all terms are the same?

Benjamin Giles · Answer

Thanks Jay! That was super helpful. So If I understand this I would be looking at base rate +4.125 then whatever additional rate the lender is adding on, minus points to buy the rate down?  I was expecting (hoping for) 8% so I'm probably going to be closer to 10% unless I buy full 2 points?

10% Down Second Home/Vacation Home Loan...Anyone seen this offered recently?

Most Popular Reply