Secondary occupancy refers to a property that you use as a second home. Unlike a primary residence, a second home is typically a property where you live part-time, such as a vacation retreat or a home closer to work or family.

To qualify as a secondary occupancy property, the home must generally meet the following criteria:

• The property is located at least a reasonable distance (e.g., 50+ miles) from your primary residence.

• You intend to use it for personal purposes (e.g., vacations, weekends).

• The home is not rented out full-time or used as an investment property.

A loan for a second home offers favorable terms compared to investment property loans because it is for personal use. However, these loans have stricter requirements than loans for primary residences.

Key Features of Secondary Occupancy Loans:

1. Competitive Interest Rates
   While rates are typically higher than those for primary residences, they are lower than investment property loan rates.

2. Moderate Down Payment Requirements
   Secondary occupancy loans usually require a down payment of at least 10%, though higher down payments may improve your loan terms.

3. Personal Use Flexibility
   You can use the property for personal enjoyment and even rent it out occasionally, provided it meets the lender’s occupancy requirements.

1. Competitive Interest Rates
   While rates are typically higher than those for primary residences, they are lower than investment property loan rates.

2. Moderate Down Payment Requirements
   Secondary occupancy loans usually require a down payment of at least 10%, though higher down payments may improve your loan terms.

3. Personal Use Flexibility
   You can use the property for personal enjoyment and even rent it out occasionally, provided it meets the lender’s occupancy requirements.

To qualify for a secondary occupancy loan, lenders will evaluate:

• Credit Score: A higher credit score (typically 680 or above) is often required.

• Debt-to-Income (DTI) Ratio: A lower DTI ratio ensures you can manage payments on multiple properties.

• Reserves: Many lenders require proof of financial reserves to cover several months of payments for both your primary and second home.

Additionally, you must provide evidence that the property will be used as a second home rather than an investment property.

It’s important to differentiate between a second home and an investment property. A second home is primarily for personal use, while an investment property is purchased to generate rental income.

If you intend to rent out the property full-time, you will need to apply for an investment property loan, which typically has higher rates and stricter requirements.

Whether you’re dreaming of a vacation cabin, a beachfront retreat, or a cozy getaway, a secondary occupancy loan can help make it a reality.

Our team at Pacific Northwest Home Loans specializes in helping Washington State homeowners finance their second homes. We’ll guide you through the process and help you secure competitive rates and terms.