Vacation home and investment property mortgages
Buying an additional property is still one of the most exciting moves a homeowner can make in 2026—whether you’re dreaming of a lakeside retreat, a city condo for weekend escapes, or a property that generates steady rental income.
The catch: financing a second home or investment property isn’t quite as simple as financing your primary residence. Lending guidelines have tightened, short-term rental rules continue to shift, and investors face more scrutiny. If you’re planning to expand your real estate footprint this year, here’s what you need to know.
What’s the difference between a second home and an investment property?
A second home is a property you plan to use personally for part of the year. Think vacation spots, weekend getaways, or a conveniently located residence for frequent work travel. Your lender classifies it as a second home based on your intent to occupy it—not rent it—on a recurring basis.
An investment property, on the other hand, is purchased primarily to earn income. Renting it out long-term, listing it as a short-term rental, flipping it for profit, or buying in an up-and-coming area expecting appreciation—all of these fall under investment use.
Lenders treat the two categories very differently, which means your costs, requirements, and obligations vary significantly.
What if you want to rent out your second home?
In 2026, regulations around short-term rentals (Airbnb, VRBO, etc.) vary widely by state and city—and lenders have become stricter about occupancy expectations.
You may be allowed to rent your second home for part of the year, but:
• You must still occupy it personally for a set amount of time.
• Exceeding the allowed rental days can trigger a loan default, giving your lender the right to demand full repayment.
• Rental income from a second home cannot be used to qualify for the loan.
Rental income can sometimes be used toward qualifying for an investment property mortgage, but lenders often require either experience managing rentals or a professional property management plan. Predictable income requires predictable oversight.
Things to know before buying an investment property
Higher down payments are the norm.
Mortgage insurance isn’t available for second homes or investment properties. Because lenders take on more risk, they typically require a larger down payment.
For investment properties, expect:
• Minimum 20% down, often 25–30% depending on your credit, reserves, and the type of rental.
Stricter underwriting requirements.
A primary residence comes with a built-in motivator: you live in it. Miss payments, and you lose your home—so lenders view those loans as lower risk.
For second homes and investment properties, lenders look for stronger financials, including:
• Higher credit score expectations
• Larger cash reserves
• Stable, documentable income
• A healthy debt-to-income ratio
You must show that you can comfortably handle all your existing financial obligations plus a new property—without depending on future rental income (unless it’s structured as an investment property purchase and documented appropriately).
Buying another home in 2026: the landscape
The real estate market is still competitive, interest rates fluctuate, and lending guidelines evolve more frequently than they used to. Investors are watching rental market regulations closely, and lenders are more careful about risk.
None of this makes buying a second home or investment property impossible—it just means you need clarity, preparation, and the right mortgage partner.
Need a helping hand?
Navigating a second home or investment property purchase can feel overwhelming, but you don’t have to do it alone.
Netter Lending offers tailored financing options for both second homes and investment properties, designed to fit your goals—whether you're:
• Building rental income,
• Flipping a property for profit, or
• Securing a vacation home for your family.
We help you understand your options clearly, prepare your file upfront, and choose a loan strategy that aligns with your financial vision.
