🏖️ Daily Mortgage Rates LIVE – Second Homes & Vacation Loans

Join us this Wednesday as we break down today’s Daily Mortgage Rates and shift the conversation to Second Homes and Vacation Property Loans.

In this livestream, we’ll discuss what borrowers should consider when financing a second home or vacation property, how loan structures differ from primary residences, and what lenders typically look for in these types of purchases. We’ll also cover planning strategies for buyers exploring lifestyle-driven properties while maintaining long-term financial balance.

📲 Feel free to leave comments or ask questions during the stream — join the conversation!

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👉 https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

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Check out all episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as thousands of Non-QM mortgage loan program variations using alternative income documentation!

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programs using Alternative Income Documentation such as Bank Statement Mortgages...

Transcript

So let’s go ahead and get started today. My name is Nick Hiersche. I’m the President of The Mortgage Calculator.

We are a lender and broker in over 20 states with over 200 loan officers. And if you’d like a full itemized loan estimate for anything you see today, please get with one of our team members. They’d be happy to help you out. Let me go ahead and share my screen, and we’ll check out the rates for today. So as we do every day, we want to make sure we check out the market in general.

So if we see here, this is going down a little bit today. You can see we had a little bit of a spike the other day, a lot of ups and downs. Generally, it’s coming down a little bit. Hopefully it continues. But we always want to put things into perspective. Of course, during the week, during market hours, things move every day. But we want to look at a larger time period to see the general rates. And you can see we’re pretty much at one-year lows. It’s been a little bit up and down over the last few months, but we’re much lower than we were one year ago, which is great news for all of our borrowers out there.

Now let’s get into our live rates. So I just refreshed this a few minutes ago. These are our live rates for this morning. We set up a standard scenario to get the best pricing across all of our different options and compare everything apples to apples. So it’s a single-family home, $500,000 purchase price, $300,000 loan amount, 60% loan-to-value, 760 FICO credit score, and an estimated 40% debt-to-income ratio. That way we can get pricing on all these different options.

So first up, our standard conventional primary home loan — what you typically think of when you think of a mortgage — comes in today at a 5.875 rate. Final APR is 6.135. Hopefully that comes down just a touch today as we see rates trending downward.

And if our borrower doesn’t qualify for a conventional option, typically the next option we want to look at is FHA, which allows more leniency on credit issues and a higher overall debt-to-income ratio, but does require upfront and yearly mortgage insurance. So FHA comes in today at a 5.25 rate, with a final APR of 6.139. As typical, FHA is going to be a little more expensive than conventional when we compare APR apples to apples.

And for all our eligible vets, active service members, and surviving spouses, VA programs are amazing. VA comes in today at a 5.375 rate, with a final APR of 5.627. Even though the rate is slightly higher than FHA, the final APR is much better because there are much lower fees on a VA loan. So when you compare APR, VA is typically the best option.

And for our borrowers in USDA-eligible areas — the rural areas of the country — USDA is another good option to compare. USDA comes in today at a 5.125 rate, with a final APR of 5.802. Borrowers shopping in these areas are typically comparing USDA to FHA or conventional, and you can see here USDA is a little bit better in this scenario once all fees are included.

Now once we start getting into our non-QM options, this is where we calculate our outside-the-box solutions, which is what we’re going to be talking about today for second homes and vacation rentals.

Our non-QM alt-doc option is what we use when a borrower doesn’t qualify for conventional or standard programs and needs to use alternative documentation — especially for self-employed borrowers — such as bank statements, 1099s, P&Ls, etc. Rates come in at 6%, with a final APR of 6.272, which is higher than conventional, as expected, since alternative documentation typically costs a little bit more.

We can also use these options for investment properties. Rates come in at 6.125, with a final APR of 6.448. When we compare that to conventional investment properties at the same rate, the final APR is just slightly cheaper at 6.438. Typically, conventional tracks just a touch better than alt-doc, which is normal.

Now one of my personal favorite programs here at The Mortgage Calculator is our DSCR loan. No income or employment needed. We simply use the estimated rents from the rental property. If the rents exceed the payment — aka the property cash flows — that’s a DSCR ratio of 1.0 or higher.

This option includes a three-year prepayment penalty, which is standard. Rates come in at 5.999, with a final APR of 6.222 — absolutely smoking, beating conventional and alt-doc. And we can even add a five-year prepayment penalty to sweeten the deal. Rates drop to 5.875, with a final APR of 6.3 — again, absolutely blowing the others out of the water. That’s why we love our DSCR options.

We can also do no prepayment penalty options. Some states don’t allow it, and some investors don’t want it. No problem. Rates come in today at 6.125, with a final APR of 6.448 — just a touch higher than conventional.

We also have a ton of other options: second mortgages, commercial loans, and many other programs. You can check out our live rates page for actual quotes. But now let’s get into our deep-dive topic for today and see which of these programs are best for a vacation home or second home.

I always want to pull up an example. I’m here in the Fort Lauderdale area, so I found a nice home that looks vacation-ready or rental-ready. This home is priced at $1,150,000, which exceeds conventional loan limits. Typically, when we have a customer looking to buy a second home at this price point, we won’t be able to use conventional financing, especially with lower down payment options.

So for a second home or vacation home purchase using non-QM financing, we can do 15% down. Remember, a second home — also known as a vacation home — must not be in the same city as your primary residence, and there are specific occupancy requirements. The biggest one is that you must occupy the property for at least 14 days per year. You cannot rent it on an annual lease if it’s classified as a second home.

If you don’t meet that 14-day requirement, the property must be classified as an investment property. In that case, we typically use DSCR options, especially for short-term rentals. This is a very common point of confusion, so it’s important to clarify upfront.

Now let’s look at rates. For a non-QM full-doc second-home purchase with 15% down, we’re seeing a 6.75 rate with 2.375 points, or a 7.499 rate with a lender credit of about half a point — almost $5,000 in this example. This allows us to get a loan amount close to $1 million, which exceeds conventional limits.

If we reclassify this as an investment property because the borrower won’t occupy it 14 days per year, we can still use non-QM full-doc financing with 15% down. Rates come in around 6.875 with higher points, or 7.5 with minimal points. We can still capture rental income, whether long-term or short-term, depending on documentation.

Now for DSCR, we can still do 15% down with a five-year prepayment penalty. This allows both short-term and long-term rental income, but documentation is key. Estimated rents must cover PITIA. Adding the prepayment penalty actually improves pricing. Rates come in around 6.749 with points, or even a 7.99 rate with a lender credit.

If rents are tight, we can use interest-only DSCR options. This gives us a ten-year interest-only period, then converts to a fully amortized loan. Using interest-only lowers the qualifying payment, making it easier to meet DSCR requirements. In this example, the payment drops to just under $6,000, which can make the deal work.

If we still can’t hit the ratio, increasing the down payment to 20% may be necessary. DSCR loans are flexible, but they do require careful structuring. We can use long-term or short-term rents as long as they’re properly documented.

There are many ways to structure a second home or vacation rental, whether conventional, non-QM, or DSCR. It’s a very popular request right now as more people buy second homes and use short-term rentals to offset costs.