Advice for second-time home buyers: What to know

When you’re looking to buy your second home, it’s good to refresh yourself on the process. A lot can change the second time around. What advantages do you have as a current homeowner? What programs can you qualify for? What’s the current state of the housing market?

If you’re asking these questions, you’re already ahead of the game. Let’s get those questions answered and more, starting with some helpful tips to simplify your journey toward homeownership.

Is it easier to buy a home the second time?

Already having the experience of buying a home gives you a big advantage. Your expectations are more realistic, and you’ve likely learned how to deal with common bumps in the road to purchasing.

That being said, no two home purchases are the same. When both the market and your life evolve over the years, you should prepare to encounter a whole new set of considerations.

You may be buying and selling at the same time

When you transition from your first home to your second, you may have a period of time when you own both. The more you can minimize this time frame, the less you’ll have to worry about double mortgage payments and double property responsibilities.

Another possibility to plan for is selling your first house too early before buying your second. As you know, closing on a home takes time, and you don’t want to end up without a place to stay.

These complications may arise when you need to sell your current home to make your new down payment. That's the reality for many second-home buyers. If this sounds like you, look into a home equity loan or a bridge loan. These personal loans come in handy to bridge the gap, and you can repay them after you sell your first home.

While Rocket Loans^SM doesn’t currently offer bridge loans, we can help you explore options during this transitional period.

Housing prices may have changed

Familiarize yourself with recent trends in the housing market to help you modernize your budget.

As of February 2025, the new home median sales price in the U.S. was $414,500, according to the Federal Reserve Bank of St. Louis. Compared to $420,900 in February 2024 and $433,300 in February 2023, median home prices have been relatively stable, dipping only slightly, for the past 2 years. If you purchased your first home recently, current sticker prices should come as no shock.

But the story is different the longer you’ve held onto your first home. The new home median sales price was $331,800 in February 2020 and $286,600 in February 2015. On one hand, homes will be pricier than you may remember. On the other hand, your home should have likewise appreciated in value over the years, giving you more purchasing power.

The real estate market may have changed

Homes available to you depend on the development of the housing market. In 2025, housing inventory continues to sit at unprecedented lows, but there’s a moderate upward trend. You can adjust to this market in a few ways:

• Offer higher bids to compete against other buyers.
• Make decisions quickly — houses move off the market fast.
• Think about what you need in a house versus what you want in a house to keep your options open.

Another smart play is getting preapproved for a mortgage. Preapproval is a process where a lender provides an estimate as to what you could borrow, and at what rate, for your next home. Sellers often hold preapproved buyers with higher consideration, which is good news for you.

Expect higher-than-normal interest rates. As of April 2025, the average interest rate for a 15-year fixed-rate mortgage stands at 6.0%, a hike from 4.2% in April 2022, as reported by the Federal Reserve Bank of St. Louis. A 30-year fixed-rate-mortgage, meanwhile, is 6.8% as of April 2025, higher than the 5.0% rate in April 2022.

Online home buying has grown in popularity

One major difference over the years is the increasing popularity of online home buying. Now you can increase the speed and breadth of your search. Keep in mind, your competition has access to these tools, too, increasing demand for homes. Also, always check for added fees.

Manage inspections and home showings with third-party buyers such as Orchard. While this service adds an extra cost, it takes some of the work off your shoulders. Or consider virtual agents like Redfin that cost less than a traditional real estate agent.

Forget about fax machines; virtual documents, electronic signature apps, and online notaries are becoming more of the norm as real estate agents continue to modernize. You can get preapproved online with Rocket®. Our Prequalified Approval enables our team to verify your credit and debt and estimate your income and assets — all without stepping foot in an office.

For an even stronger approval, try Verified Approval from Rocket. Our loan officer will check your credit, W-2s, tax returns, bank statements, and pay stubs for an even more accurate estimate of how much home you can afford.

Second-time home buyer requirements

While a lot has changed over the years for buying a home, the requirements remain mostly the same. Let’s take a look at a few of them.

• Credit score: Your credit score measures how well you’ve handled debt over the years. Mortgage lenders like to offer lower interest rates to less-risky borrowers. On the credit score scale from 300 – 850, you’ll want to hit 620 or higher for a conventional loan. If you aren’t there yet, try looking for ways to prioritize debt repayment over other expenses.
• Debt-to-income ratio: Debt-to-income ratio compares your gross monthly income to your monthly debt payments. Lenders like to know that you have enough money coming in to cover a loan. You’ll want a DTI ratio around 43% or less to qualify. If that doesn’t sound like you, try alternative lenders and loan programs that accept higher DTI ratio applicants, like a Veteran Affairs loan or a Federal Housing Administration loan.
• Down payment: A down payment is how much you pay up front when purchasing a home. The larger your down payment, the lower your interest rate. Spending more now can save you a lot down the road, but always consider your immediate financial needs, too.
• Income requirements: If you want to borrow money, you’ll have to prove you can afford the monthly mortgage payments. That’s why your lender will check in on your income and assets before offering the loan. Prepare in advance your W-2s, pay stubs, bank account statements, and income tax returns for this part of the process.

6 additional tips for second-time home buyers

Here are some additional tips to make the most of your second home-buying experience.

1. Explore second-time home buyer programs

Assistance isn’t just available for first-time home buyers. As a second-time home buyer, you can also find programs and grants. Explore the Department of Housing and Urban Development for resources to help you in your unique situation.

2. Know your loan options

Your financial needs change over the years. That means your best mortgage option can change, too. Look into these different loan types to find the best fit for your second-home purchase.

• FHA loans: FHA loanshave a lower credit score requirement and offer a lower down payment — even if you’re buying your second home. If you have marks on your financial record, these loans may provide the assistance you’re looking for.
• Conventional loans: Unlike FHA loans, conventional loans aren’t backed by the government and work best for those with stronger financial histories. They require a down payment of at least 3%, or at least 20% to avoid paying private mortgage insurance. Expect a required 620 credit score minimum and a 43% DTI maximum.
• VA loans: If you’re a veteran, active service member, or qualified surviving spouse purchasing your second home, you might apply for a VA-backed loan. With zero down payment and lower required credit score, VA loans offer a viable path toward your second home.

3. Find a lender you trust

If your first lender didn’t work out for you, look into finding a new one for your second home purchase. We promise they won’t be offended.

Consider the following when choosing your lender:

• Mortgage types: You’ll want a lender that offers the type of loan you’re looking for.
• Mortgage terms: Work with a lender that expects you to pay off the loan on a schedule that fits your plans, whether that’s 10 years or 30 years.
• Interest rate: This is the annual cost for holding the loan, which plays the biggest role in how much extra you’ll pay in the long term.
• APR: The annual percentage rate is like the interest rate, but it includes both the interest rate and fees that come with the loan.
• Mortgage points: If you prepay interest up front, some lenders will lower your monthly payments.
• Mortgage rate locks: You might be able to “lock” your mortgage interest rate before receiving your loan.
• Down payment: How much money is the lender requiring you pay for the interest rate you want?
• Closing costs: Learn early on what fees you’ll need to cover when closing on your second home.
• Prepayment penalty: Believe it or not, some lenders have penalties for paying off your loan early.

Rocket has a list of questions you can ask your mortgage lender.

4. Consider using your home equity toward a down payment

One of your best assets for securing your second home is the equity of your current home. Home equity is the value of your home minus the remaining loan balance, and it can be used as payment.

You can tap into your home equity in a few ways:

• Cash-out refinance
• Home equity loan
• Home equity line of credit (HELOC)
• Reverse mortgage (if you’re age 62 or older)

5. Look for houses online

Online home shopping has grown increasingly popular over the years. It allows you to see more homes faster and across a wider geographic area.

While online is a great place to get started, you’ll want to work with an experienced real estate agent to see these homes in person. Curated pictures and videos won’t tell you as much as walking through the front door yourself.

6. Decide what you want from your new home

Finally, make a list of priorities for your second home. Consider your experience with your current home. What worked for you? What did you always feel was missing? If you’d like to make a change, this is the time to do it.

Break down your list into three categories:

• Wants
• Needs
• Can’t live without

Then, give your list to your real estate agent and lender. They can combine this information with their knowledge of the market to lead you in the right direction.

The bottom line: Approach the home buying process with confidence

As a homeowner, start the home buying process knowing full well you have the background and wisdom needed to make the right decisions. Plenty has changed since closing on your first property, and so have you. When it comes to buying your second home, experience is often the best teacher.

Ready to finance your second home? Get started online today with Rocket Mortgage.