Buying a vacation home is surprisingly different from buying a primary new home or residence. Whereas functionality and practicality is one of the most important considerations when buying a primary residence, comfort and luxury are top importance in a vacation home.

From the moment a home buyer decides to get a vacation home, they must anticipate the ways in which the purchase process will be different. Even the mortgage considerations are not the same. Qualifying for a vacation home mortgage is often more difficult than qualifying for a primary residence mortgage. If you're thinking about buying a vacation home, here's what you need to know.

For informational purposes only. Always consult with a licensed mortgage professional before proceeding with any real estate transaction.

Vacation Home Mortgage Vs. Primary Residence Mortgage

Although the process for borrowing a mortgage is the same regardless of the type of home being purchased, there are some major differences between vacation home and primary residence home mortgages. Knowing these differences can help.

Primary Residence Mortgage

A primary residence mortgage usually requires a down payment between 3.5% and 20%. The amount of money that the buyer puts down depends on the type of mortgage and the buyer's ability to afford a mortgage. Some mortgages for primary residences (like the VA loan) require no money down at all.

Interest rates for a mortgage on a primary residence are often very competitive. Credit requirements for a primary home mortgage can be relaxed, depending on the type of mortgage the buyer is seeking. FHA mortgages, for example, may accept buyers with a credit score below 580. Conventional loans expect buyers to have a higher credit score.

Vacation Home Mortgage

Vacation home mortgages require a much larger down payment, often between 10% and 20%. Vacation home interest rates are usually higher, and credit requirements are much stricter. Most mortgage lenders require the buyer to have a credit score of 620 or higher. In order to buy a vacation home, the buyer must be financially prepared to qualify for and pay for an additional mortgage.

Can You Afford a Second Mortgage Payment?

Paying for a second mortgage requires the home buyer to be relatively comfortable financially. Budgeting can help ensure the home buyer has money to pay for their vacation property. Home buyers who aren't sure whether they can afford a vacation home may need to seek advice from a financial planner. A good financial planner can take into consideration factors like salary information, regular expenses, debts and assets to determine whether a vacation home property is affordable.

The lender too will be able to help the home buyer decide if purchasing a vacation home is possible. A reputable lender will consider debt-to-income ratio when making this determination. The debt-to-income ratio is the amount of money the buyer takes in every month versus the amount of money the buyer must pay toward debts every month. If the debt-to-income ratio is more than 41% with the vacation home, the buyer will not be able to qualify for the loan.

Contact A Reputable Lender to Get Started

If you're a Gulch home buyer who would like to purchase a vacation home, you can get started by contacting a reputable lender. If you had a good experience borrowing a mortgage when you purchased your primary residence, start by contacting the same lender. If you would prefer a new lender, talk to your real estate professional for a recommendation, or get a recommendation from someone you trust.

For informational purposes only. Always consult with a licensed mortgage professional before proceeding with any real estate transaction.