The mortgage rate you can expect depends on many factors. That's why you can't just rely on advertised rates to know what you'll actually be offered. Rates for second homes are comparable to those of first homes, with just slightly higher fees.
Here are some considerations:
1. Your credit rating is probably the biggest determiner of your interest rate.
2. You'll need to show at least two years of self-employment to satisfy most lenders. However, if your self-employed income is as good or better than it was doing the same thing as an employee, this requirement may be waived.
3. Self-employment income is your taxable income, with a few adjustments for things like depreciation. It is NOT your gross (before deductions) income. However, there are programs that use your bank statements to calculate your income instead of your tax returns. These come with higher rates but can make getting approved easier.
4. If you need income from the vacation home to be able to qualify to finance it, the property will be classified as a rental, not a vacation property. your rates will be higher and you'll need at least 20 percent down in most cases.
To get custom quotes from lenders that you can compare easily, just use our form. Then contact the ones with the best offers.
Thank you for writing, and good luck.