Second home vs Investment loan. Which one better?

[Andy C.]

Hi all,

Second home Loan

• Around 45% downpayment (to meet 50% DTI)
• 6% apr
• 1800/month mortgage (principle and interest)

Investment Loan

• only 20% down
• 7% apr
• 2900/month mortgage (principle and interest)

Notes:

• I can still break even on Investment loan when renting out
• I'll be paying an extra 1100 per month if I take the investment loan
• Normally I would take the Second home with the lower APR, but I have to come up with 45% downpayment compared to only 20% for investment loan.
• I will refinance once the interest rates goes down a bit (hopefully in the next 5 years)

Should I take the second home loan and pay a 45% downpayment or save that extra 25% downpayment and take the investment loan and pay an extra 1% on APR as well as an extra $1100 a month?

Any comments/advice are appreciated. Thank you!