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The Lake House: Getting a Second Home Mortgage

So you’ve gotten to that point in your life where you are finally thinking about taking out a second home mortgage that will allow you to purchase that lake house you’ve always wanted. Your kids are all grown up, have likely started families of their own, and you’re looking for that perfect place to escape to every once in a while — whether it be on your own or with the entire family. While it may be more fun to start thinking about the boat you’re going to buy or the canoes you’re going to purchase, let’s take a step back and talk about some of the things to consider before pulling the trigger on this second home.

First off, don’t let the term “second home mortgage” scare you. While it may seem daunting to take on a second home loan, there are many mortgage loan programs out there that will allow you to purchase your dream lakefront property. It’s qualifying for the loan that is the hard part. Qualifying to buy that lake house can be a bit more involved than one would think and much more stringent than when purchasing your first home.

Here are a few things to remember before taking on a mortgage for your vacation home:

Down payments

You will need to come up with a substantial down payment — one that is likely higher than when you purchased your first home. This can be anywhere from 10% to 35%, depending upon the lender. The minimum down payment requirement is 10%.


You will need to meet credit standards — which in this case may be higher than when you bought your first house. Lenders typically require a higher credit score for loans on second homes. Some reports suggest you will need a credit score of 725 to 750 to qualify. over 660.


You will need to figure out whether your debt-to-income ratio is good enough to earn that second home mortgage. Expect lenders to put your debt-to-income ratio under closer scrutiny for your second mortgage than your first home. Lenders will want this number to be low — generally below 36. 45% same as a primary home The lower your debt-to-income ratio is, the greater your chance is at getting that mortgage for your second home.

Vacation Home vs. Investment Property

It’s important to know the difference between these two types of properties. If you’re hoping to make this second home a vacation home, rather than an investment property, the process can be a little bit easier. Not only will down payment requirements be a bit more relaxed, but also interest rates are typically better.


Another point to consider when purchasing that lake house are the tax implications. A potential homebuyer should always be cognizant of taxes — even more so when it comes to that second home. For example: a second-home buyer who chooses to rent out the property part of the year, to get others to help pay the bills, is subject to different tax rules depending on the breakdown between personal and rental use.

So whether you’re looking to purchase this second home as investment property, or as that long-sought-after lake house, there are several things to keep in mind before approaching a lender about that second home mortgage.

This is where Blue Water Mortgage can help you. Our experience and financial expertise can help you navigate these tricky loans and get the best rate possible. Contact us today to speak with a broker.

Roger Odoardi

Roger is an owner and licensed Loan Officer at Blue Water Mortgage. He graduated from the University of New Hampshire’s Whittemore School of Business and has been a leader in the mortgage industry for over 20 years. Roger has personally originated over 2500 residential loans and is considered to be in the top 1% of NH Loan Officers by leading national lender United Wholesale Mortgage.