Finance a Second Property for Personal Use or Part-Time Rental
St. Louis families buying lake homes or Ozark cabins for weekends and holidays rely on vacation home mortgages to make ownership possible. These loans offer lower rates than investment property loans, because lenders see personal-use homes as lower risk. When you show intent to occupy the property yourself part of the year, you qualify for better terms than a full-time rental would receive.
Higher Down Payments and Credit Scores for Vacation Homes
Buyers financing a second property while keeping their primary mortgage face stricter requirements. Most lenders ask for 10–20% down on a vacation home, versus as little as 3% on a primary residence, and your credit matters more — minimums typically start around 640, with better rates unlocking at 700+. Knowing the requirements upfront helps you save the right amount and strengthen your application.
Occupancy Rules Determine Whether It Qualifies as a Vacation Home
Lenders classify a property as a vacation home when you occupy it personally for at least 14 days a year or 10% of the days it’s rented, whichever is greater. If you rent it beyond that threshold, it may reclassify as an investment property with higher rates and down payments. Correct classification matters — it’s the difference between vacation-home terms and investment-property terms.
Debt-to-Income and Cash Reserves Affect Approval
If you’re wondering whether you can carry two mortgages, review your debt-to-income ratio carefully. Lenders add your new vacation home payment, taxes, insurance, and any HOA fees to your existing obligations, and if total debt exceeds 43% of gross income, approval gets harder unless you qualify for a portfolio program with flexible underwriting. We calculate your DTI up front so you know where you stand.
Conventional, Jumbo, or Portfolio Options
Conventional loans backed by Fannie Mae or Freddie Mac are the most common choice, with competitive rates and down payments as low as 10% for qualified buyers. If your vacation property exceeds the conforming loan limit — $832,750 in most Missouri counties for 2026 — a jumbo loan applies, with stricter credit and down payment requirements. Portfolio loans offer flexibility for unique properties or borrowers who fall outside standard guidelines.
Documenting Rental Income When You Plan to Rent Part-Time
If you plan short-term rentals to offset costs, you can use potential rental income to strengthen your application. Lenders typically count 75% of expected rental income when calculating your debt-to-income ratio, which improves approval odds by lowering the effective cost of the second mortgage. You’ll need documentation — comparable rental data or signed agreements — to support the projection.
Frequently Asked Questions
Can I use a vacation home loan to buy a rental property?
Not for full-time rentals — lenders require personal occupancy part of the year for vacation-home classification. If the property is primarily rented without owner use, it must be financed as an investment property.
How much down payment do I need?
Typically 10–20%, higher than a primary residence but lower than a pure investment property. A larger down payment improves your rate.
Can I rent out my vacation home?
Yes, within limits — occupy it at least 14 days a year or 10% of rented days to keep vacation-home status. Beyond that, it may reclassify as an investment property.
Will I need a jumbo loan?
Only if the price pushes your loan above the 2026 conforming limit of $832,750. Many Missouri lake and cabin properties fall under that and finance conventionally.
Are vacation home rates higher than my primary mortgage?
Slightly — typically a fraction of a percent above primary-residence rates, and lower than investment-property rates.
Learn more in this article: How to Finance a Vacation Home | Zillow — This guide from Zillow outlines how financing a vacation (second) home differs from a primary residence, what counts as a vacation home versus an investment/rental property, and typical lender requirements (down payment, credit score, debt-to-income, etc.).