Oro Valley Homes for Sale - Vacation Home or Rental Property

A vacation home is typically defined as a secondary residence at least 50 miles away from your primary residence. If you do plan to rent out your vacation home, it’ll be classified as a rental property, which has different rules than a vacation home or primary residence, as we’ll discuss below.
Compared to loans for primary residences, loans for vacation homes typically have slightly higher interest rates, and lenders may require a higher credit score as well as a larger down payment. For example, a primary residence allows for down payments as low as 3% for conventional loans. But for a vacation home, you may need 10 – 20%. With these types of loans, it’s also important to remember that renting your vacation getaway while you’re not using it might violate the terms of your loan.
With a rental property, you’ll likely pay a higher interest rate than those for primary residences and vacation homes. And need to put at least 20% down, since it can be a challenge to get mortgage insurance on rental properties. But the good news is that your lender will consider a portion of the anticipated rent as income, which could help you qualify for a loan that you otherwise wouldn’t without that added income. And of course you’ll be able to offset your costs with the regular rental income.