How To Buy A Second Home With No Or Low Down Payment
Author:
Melissa BrockMar 1, 2024
•4-minute read
Buying a second home can be rewarding – but with great reward can often come significant upfront costs. Fortunately, you can save on those upfront costs with a low or no down payment home loan. While this strategy may have potential drawbacks, like needing to change your primary residence, it may be a worthwhile option if it lets you purchase a second home with little to no money down.
We’ll look at how to buy a second home with no or low down payment and explore alternative strategies for financing a second home.
Financing A Second Home Purchase: Can You Avoid A Down Payment?
Most of the time, you must furnish a down payment when you opt for a mortgage. In fact, you must often put down a higher down payment for a second home compared to your first.
If you’re considering a conventional loan, you must make at least a 10% down payment.
However, if you’re planning to make this new home your permanent residence, you can finance the second home without a down payment using a government-backed mortgage. This option requires you to make the second home your primary residence within 60 days of the purchase. Your current home could then become a vacation home or an investment property.
And this is just the beginning. There are additional mortgage loan options to explore to help avoid making a down payment on a second home, such as an assumable mortgage.