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Rates better for investment or second home?

I want to get a second FHA financed property but Idk the difference costwise between investment or second home classfication. If second home is lower cost for example then I'd use it as that for a couple years before renting it out. Is one better than the other by maynard_w7856725 from Cross City, Florida. Sep 8th 2014 Reply


William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,045 contributions

With FHA, you can only have one FHA loan out at a time (with very few exceptions), and FHA is for Primary Residence only.. you cannot use FHA to purchase an investment home or a 2nd home.. Also, because 2nd homes and investment properties are more RISKY for the lender, they will typically require higher down payments and higher interest rates.. 10% minimum for 2nd home, and 20% for investment. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Sep 8th 2014
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Phil Dumouchel (PhilDu)
#1 ranked lender in South Carolina - 2,228 contributions

The only way to get a 2nd FHA loan is if you are relcating to a new community too far from where you currently live to commute, or if possibly if you can document that the current home is too small because your family has grown significantly since you purchased the home. You don't decide whether the new mortgage is for a 2nd home or investment property, that is based on where the home is located and what your intent is. If you plan to rent the home, it MUST be an investment property or you could potentially be charged with mortgate fraud. Investment properth mortgages generally require 15-20% downpayment, has higher rates and you can't use a FHA loan for them; 2nd home (a vacation property) requires 10% down.

Sep 8th 2014
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Sean Young (SeanYoung)
#2 ranked lender in Colorado - 1,109 contributions

One, you can't use FHA on investment property. Two, you will most likely not qualify for a 2nd FHA loan. FHA in most cases will only allow for one loan out at a time. You should look into a conventional loan if possible as this will give you more options. Investment will require a larger down payment than a 2nd home will. I would speak with a local loan officer and have them go over all of your choices. Best wishes, Sean

Sep 8th 2014
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