Current Second Home Mortgage Rates

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Written by

Andrew Dehan

Edited by

Suzanne De Vita

Edited by

Suzanne De Vita

On Monday, December 25, 2023, the national average 30-year fixed mortgage APR is 7.02% according to Bankrate's latest survey of the nation's largest mortgage... lenders. Use Bankrate's rate table to compare today's second home APRs.

Current second home mortgage rates
Second home mortgage qualifications and requirements
How to get a second home mortgage
Compare mortgage lenders side by side
Pros and cons of a second home mortgage
Why compare second home mortgage rates?
Second home mortgage FAQ
Additional resources on second home mortgages

How to compare mortgage offers

Comparison-shopping for a mortgage isn’t just smart — it’s crucial to get the most competitive rate and mortgage terms. Even a 0.1 difference in an interest rate can save thousands of dollars over the life of the loan. Bankrate’s mortgage rate table allows you to easily compare personalized rates from our marketplace of trusted lenders. Here is how to compare mortgage offers on Bankrate in 3 easy steps:

Determine the right type of mortgage: There are a lot of options in home loans, so it’s important to research and decide what type of mortgage might be best for you, given your finances and your short- and long-term goals. 
Gather necessary documentation: In order for lenders to give you the most accurate quote, you will need to provide paperwork once connected with a lender that verifies your income, assets, debts and employment. 
Compare mortgage offers online: Bankrate helps you easily compare mortgage offers by using our mortgage rate table below. Our rate table filters allow you to plug in general information about your finances and location to receive tailored offers. As you weigh offers, be sure to consider APRs, lender fees and closing costs to ensure you’re making accurate comparisons — and maximizing your savings potential.

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On This Page

Current second home mortgage rates
Second home mortgage qualifications and requirements
How to get a second home mortgage
Compare mortgage lenders side by side
Pros and cons of a second home mortgage
Why compare second home mortgage rates?
Second home mortgage FAQ
Additional resources on second home mortgages

Current second home mortgage rates

The rates on mortgages for second homes are higher than those for loans against primary residences because they’re a riskier prospect for lenders — if in financial straits, you’re much more likely to pay the mortgage on the home you live in than the one you vacation in or rent out.

The interest rates on all types of mortgages, including those for second homes, have risen sharply since 2021, in part due to the Fed’s response to curb inflation. For mortgage rates to drop, inflation will first need to cool.

Second home mortgage qualifications and requirements

Your second home has to be used as a residence in order to qualify for a second home mortgage — it can’t be an investment or rental property. Investment properties come with stricter mortgage requirements, and are also taxed differently than second homes.

Similar to the mortgage on your primary residence, your credit, income, employment history and other factors need to meet the lender’s requirements. As early in the process as possible, review your credit report to check for errors or ways to improve your score. If you can, work on paying down debt — this can boost your credit and help you qualify for a bigger mortgage.

Here are some of the most common requirements for a second home mortgage:

Credit score: 660 or higher
Down payment: 10% or more
Debt-to-income (DTI) ratio: 45% or less

Depending on where your second home is located, your lender might also require flood insurance.

How to get a second home mortgage

Here are the basic steps to obtain a second home mortgage:

Determine where you’ll get your down payment.
Budget for a second set of monthly mortgage payments.
Research the best type of second home mortgage for you.
Research second home mortgage rates.
Choose the right lender for you.
Get preapproved.
Search for and make an offer on a second home.
Apply for your second home mortgage.
Be prepared to provide additional information in underwriting.
Close on your new second home.

Lender compare

Compare mortgage lenders side by side

Mortgage rates and fees can vary widely across lenders. To help you find the right one for your needs, use this tool to compare lenders based on a variety of factors. Bankrate has reviewed and partners with these lenders, and the two lenders shown first have the highest combined Bankrate Score and customer ratings. You can use the drop downs to explore beyond these lenders and find the best option for you.

Lender

Garden State Home Loans

NMLS: 473163

State License: MB-473163

Pros and cons of a second home mortgage

Pros of second home loans

You can deduct the interest and property taxes. You can deduct the mortgage interest for both your primary residence and second home up to $750,000 total (or $375,000 if married filing separately). This applies only to “qualified” second homes, meaning you don’t rent it out, or you do rent it out but also use it yourself for a certain period of time each year. You can also deduct combined property taxes up to $10,000.
You can use your primary residence to help pay for it. You can take advantage of the equity in your primary residence to make a down payment on a second home, either through a cash-out refinance or home equity line of credit (HELOC). Note: It’s typically better to do a cash-out if you know exactly how much money you need and can get a lower interest rate on your first mortgage.

Cons of second home loans

It costs more. Generally, you can expect to have a higher interest rate on your second home loan compared to the one on your primary residence, so you’ll pay more in interest over time. You might also have a higher rate if you decide to refinance your second home mortgage down the line. Along with that, you’ll need to make a bigger down payment.
It can be harder to qualify for. Because the second home isn’t your primary residence, you’ll need to meet stricter credit and DTI ratio requirements.

Why compare second home mortgage rates?

Shop around for second home mortgage rate quotes from multiple lenders. This exercise could save you a lot of money on interest in the long run.

When you shop, focus not only on the rate quote, but also the other terms of the loan, including the annual percentage rate, or APR, which includes additional costs of the mortgage not reflected in the interest rate.

Keep in mind that some lenders might have lower closing costs than others, or your current bank might extend you a special price. There’s always some variability between lenders on both rates and terms, so make sure you understand the full picture of each offer, and think through what will suit your situation best.

Second home mortgage FAQ

Additional resources on second home mortgages

Mortgage rates in other states

As someone deeply familiar with the mortgage industry and financial products, let me provide insights into the various concepts discussed in the article you've shared:

Mortgages: A mortgage is a type of loan specifically used to purchase real estate. The property itself serves as collateral against the loan. If the borrower fails to make payments, the lender can take possession of the property through a legal process known as foreclosure.
Second Home Mortgage Rates: These are interest rates applied to mortgages taken out for second homes, such as vacation homes or secondary residences. Typically, these rates are higher than those for primary residences due to the perceived risk associated with a second home.
APR (Annual Percentage Rate): This represents the total cost of borrowing, including interest and other fees, expressed as an annual percentage. It provides a clearer picture of the actual cost of the loan compared to the interest rate alone.
Qualifications and Requirements: To secure a second home mortgage, borrowers must meet certain criteria set by lenders. These include credit score requirements, down payment percentages, and debt-to-income ratios. A credit score of 660 or higher and a down payment of 10% or more are common benchmarks.
Types of Mortgages: There are various mortgage options available, such as fixed-rate mortgages, where the interest rate remains constant throughout the loan's life, and adjustable-rate mortgages (ARMs), where the rate can fluctuate based on market conditions.
Lender Comparisons: Borrowers are advised to compare offers from multiple lenders to ensure they secure the most favorable terms. Factors to consider include interest rates, APR, lender fees, closing costs, and customer reviews.
Pros and Cons of Second Home Mortgages:
- Pros: Interest and property tax deductions, the ability to leverage equity from a primary residence, potential rental income if not occupied year-round.
- Cons: Higher interest rates, stricter qualification criteria, additional costs such as maintenance, insurance, and property management.
Shopping for Rates: It's crucial to compare rates from various lenders to find the most competitive offer. A slight difference in interest rates can translate into significant savings over the loan's duration.
Bankrate: Bankrate is a trusted financial platform that provides consumers with tools and information to make informed decisions about mortgages, loans, and other financial products. They offer rate tables, calculators, and expert advice to guide borrowers through the process.
Flood Insurance: Depending on the property's location, lenders may require borrowers to obtain flood insurance to protect against potential water-related damages.
Financial Considerations: When purchasing a second home, it's essential to budget for not only the mortgage payments but also other associated costs like property taxes, insurance, maintenance, and potential rental income.

In summary, securing a second home mortgage involves thorough research, comparison shopping, and understanding the associated costs and requirements. By leveraging resources like Bankrate and consulting with financial professionals, borrowers can navigate the process more effectively and make informed decisions tailored to their unique circ*mstances.

Current Second Home Mortgage Rates | Bankrate (2024)