7 Things to Consider Before Buying a Vacation House 

So, you’ve just decided to purchase a vacation house, and you’re wondering what you must know. Buying a second home is indeed a wise decision, and even though you’re not an expert in the real estate field or did not obtain your real estate license, you can still pull this thing off.

However, you should know that just like any purchase of a home, buying a new property would require serious preparation. In this article, we will help you know what to prepare when buying a vacation house, even if you did not obtain your real estate license. So, without further ado, let’s get started.

1. Decide on How You Will Use Your Vacation House

How You Will Use Your Vacation House

From the name itself, a vacation house is where you will stay when you want a vacation. However, if you still don’t own a house, you may use it to be your main residence.

You can be qualified for a home loan, and its purchase price is not more than the area’s loan limit. More so, you could take good advantage of the tax benefits of homeowners.

You may even use the vacation house as your another home. However, you will likely need at least a ten to fifteen percent down payment to secure the loan. Of course, you could still get the same tax benefits if the home was the main residence.

The vacation house could also be your investment if you plan to have it rented if not yet occupied. Again, this will help in covering the monthly payment of the mortgage.

But if your main goal is to use it as your investment property, then you will likely live in there for about 14 days or less in a year. Also, you will pay more interest on loan, which would be higher.

2. Know What You Could Only Afford

Before purchasing a second house, you must understand what are the costs you will likely face. For example, if there is a mortgage, there will be expenses for the principal, interests, insurance, and taxes.

There will also be other addition to your mortgage payment, as well as other expenses regarding the vacation property ownership, whether or not you fund on them or use a rental income.

The expenses usually include repairs and maintenance, vacancies and management and even housewares and furniture.

In offsetting the costs, owners of vacation properties may also want to take into consideration about having overnight rentals through rental platforms such as FlipKey, Airbnb,  or HometoGo, even if it’s just for short-term stays.

You can even have in-season rentals and seek assistance through professional real estate brokers if you have not yet obtained your real estate license.

3. Look for a Local Lender

Look for a Local Lender

It’s also best if you look for mortgage lenders who specialize in second homes in places where your property is located. Every lender has sources ready for the financing and someone who understands the specifics and required rules in areas where you will buy.

You should know that how you are financed usually varies on where the vacation houses are located. For the lenders, the second house is riskier than the primary residence.

And to offset the risk, buying a second house usually requires more upfront money and the capacity to afford 2 properties homes. And if you plan on borrowing, know that loans also come with high-interest rates.

4. Know Financing of a Vacation House Works

If you’ve already found a lender, you must also consider the financing options. For example, you might consider paying downpayments through savings, have cash-out refinancing from the main residence or the home equity line of your credit.

Others are wise regarding strategies, as they use their funds so it will not tack their additional debt.

5. Check Requirements for the Vacation House

Check Requirements for the Vacation House

Even if the vacation house is still considered your main home versus the investment property, it will be more complicated than primary homes. You should know the following:

Debt-to-Income Ratio

The borrowers could also finance the primary residence with the 50% DTI. And for vacation properties, it could be up to forty five per cent.


Usually, you may buy the primary residence for about a 3% downpayment. However, you will need at least ten per cent for vacation homes.

Credit Score

Usually, you will need higher credit scores to qualify for a second house than a primary residence. This is mainly because you are within the conventional loans of which the credit score is 640 and 680 for a vacation property.


In most cases, you may buy a primary residence with no reserves. And as for a vacation home, you will likely need reserves equal to a 2-6 monthly mortgage.

6. Compare Mortgage Rates

Consider Before Buying a Vacation House 

Mortgage rates for vacation houses are usually higher than financing a primary residence. So make sure you search and find the best deals of rates and terms.

7. Work with a Realtor

Of course, buying a property like a vacation house requires an expert guidance. So, if you don’t obtain your real estate license, you can still work with experts in the field – real estate professionals. They know the available properties in the market.

Wrapping Up

Deciding to purchase a vacation house is not an easy one. Perhaps the best way to get started is to live in short-term rental areas for a while. That way, you will know and understand if you like the place.

Consider other things such as restaurants or stores nearby, traffic conditions, and even the availability of hospitals and clinics or schools. With this, real estate brokers are a big help in this decision.

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