Investment & Second Home

Financing an investment property or second home

Different underwriting, different rules, different math. We’ll help you structure the financing so the property actually works for you.

A wise investor knows the loan is only half the deal. We’ll walk you through what a lender sees when your file lands on their desk — so the numbers work on paper before you sign the offer.

Investment property loans

Conventional investor loans

Traditional Fannie Mae or Freddie Mac investor programs. Qualify off your personal income and credit, with higher down-payment requirements (typically 15–25%) and reserve requirements than primary residence financing.

DSCR (Debt-Service Coverage Ratio) loans

Qualify off the property’s rental income rather than your personal W-2 income. Lender divides expected monthly rent by monthly PITI — a DSCR of 1.0 means the rent covers the mortgage; higher DSCRs generally get better pricing. Good for self-employed investors, buyers building a portfolio, or anyone whose tax returns don’t reflect real cash flow.

Short-term rental programs

Some lenders offer programs specifically designed for short-term-rental (Airbnb/VRBO) properties, qualifying off projected or actual STR income. Availability depends on the property location, local STR regulations, and lender guidelines.

Second-home financing

Second-home loans have different down-payment and reserve requirements than an investment property. Second homes must generally be occupied by you at least part of the year (not rented out full-time), enjoyed for personal use, and not managed by a third party. If you’re financing a vacation home you’ll actually use, second-home programs typically get better pricing and lower down-payment requirements than investment loans.

If you’re planning to rent the property out most of the year, the honest structure is an investment loan, not a second-home loan. Misrepresenting occupancy on a loan application is mortgage fraud — we’ll help you get it right the first time.

What to think about before you start

Investment and second-home financing carries different underwriting standards, pricing, and reserve requirements than primary-residence loans. Common expectations:

Down payment: 15–25% for investment, 10–20% for second home, depending on program.

Reserves: Lenders typically require 2–12 months of PITI held in verified assets after closing.

DTI limits: Tighter than owner-occupied, especially on investor loans.

Ready to run the numbers on a specific property?

Talk to a licensed Loan Advisor. No pressure, real math.

Talk to a Loan Advisor

Investment and non-owner-occupied financing carry different underwriting standards, pricing, and reserve requirements than primary-residence loans. Program availability, eligibility, and terms vary by lender, state, and property, and can change without notice. This is not a commitment to lend. Discuss your specific situation with a Hoot loan officer and your own tax and legal advisors before making decisions. See our Disclosures & Licensing page for state license information, and our Loan Programs hub for other categories.