{"id":12528,"date":"2010-03-28T10:49:59","date_gmt":"2010-03-28T16:49:59","guid":{"rendered":"http:\/\/template.lenderama.com\/?p=621"},"modified":"2010-03-28T10:49:59","modified_gmt":"2010-03-28T16:49:59","slug":"whats-the-difference-between-a-single-family-second-home-and-investment-property","status":"publish","type":"post","link":"https:\/\/dev203k.orbitwebx.com\/dev203k\/whats-the-difference-between-a-single-family-second-home-and-investment-property\/","title":{"rendered":"What’s The Difference Between A Single Family, Second Home and Investment Property?"},"content":{"rendered":"

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Let’s discuss the difference between a single family, second home and investment property.<\/p>\n

When applying for a mortgage<\/a>, a borrower’s “Occupancy Type” is a major factor in the amount of down payment required, loan program<\/a> available and mortgage interest rate<\/a>.<\/p>\n

Whether you are purchasing<\/a>, doing a rate\/term refinance<\/a> or taking equity out of your property<\/a> through a cash out refinance, occupancy type is always considered by the underwriter.<\/p>\n

Three Types Of Occupancy:<\/h2>\n

Owner Occupied \/ Primary Residence –<\/strong><\/p>\n

According to the HUD Handbook 4155<\/a>.1: 4.B.2.b, a principal residence is a property that will be occupied by the borrower for the majority of the calendar year.<\/p>\n

At least one borrower must occupy the property and sign the security instrument and the mortgage note for the property to be considered owner-occupied.<\/p><\/blockquote>\n

Second Home –<\/strong><\/p>\n

To qualify as a second home, the property typically must be at least 50 miles<\/span> from the primary residence, and it cannot appear that the real estate is being purchased for rental investment purposes.<\/p><\/blockquote>\n

Investment Property –<\/strong><\/p>\n

A property that is not occupied by the owner and is typically utilized for rental income purposes.<\/p><\/blockquote>\n

Down Payment Requirements:<\/h2>\n

Owner Occupied \/ Primary Residence –<\/strong><\/p>\n

Purchase for VA<\/a> and USDA<\/a> can go up to 100% financing, while FHA<\/a> requires 3.5% of the purchase price as a down payment.\u00a0 Conventional<\/a> financing may require anywhere from 5% – 25% depending on the credit score<\/a>, county, property type and loan amount.<\/p><\/blockquote>\n

Second Home –<\/strong><\/p>\n

Average 10% down for a purchase, and 25% equity for a refinance.<\/p><\/blockquote>\n

Investment Property –<\/strong><\/p>\n

Down payment requirements will range from 20-25% depending on the number of units.\u00a0 When doing a cash-out refinance on an investment property with 2-4 units, the required loan to value<\/a> will need to be 70% or lower to qualify.<\/p><\/blockquote>\n

…..<\/p>\n

*It should be noted that on any high balance loan amount the above mentioned Loan-to-Value (LTV)<\/a> requirements will change. Credit score requirements also apply.<\/p>\n

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Related Articles – Mortgage Approval Process:<\/h2>\n