Lenders generally offer more lenient terms and lower qualification hurdles for second homes than they do for investment properties. For both second homes and investment properties, you’ll find that credit requirements will be more stringent than they are for loans on primary residences. We’ve outlined a few of the differences and similarities that you’ll see while shopping below.

Mortgage Rates

You can expect your mortgage rates to be higher for an investment property than a second home. Lenders may charge anywhere from between 0.50% to 1.00% more for a mortgage on an investment property as they do on a second home. This is due to the greater perceived risk on investment properties.

Down Payments

Lenders require a minimum down payment of 20% down on Investment properties however when purchasing a second home the minimum can be as low as 5% down. This may vary based on Lender guidelines.