"Second Home Mortgage" she says. I don't own a first home???

[Sarah Williams]

Hello good people, 

I took the plunge and called a lender today. It's a Federal credit union that is next door to where I work, I figured what the heck. 

Here's the long story short - I want to invest out of state, and I was told today that I should apply for a "second home mortgage", as in one for a "Vacation home" even though I don't really plan to use it for a vacation home (at least not in the too near future), and I don't have a first mortgage. I rent my 'first home'. Is this a real thing?

Here are the details:

I am currently living (and renting) in Orange County California. I've never bought a home.  

I want to purchase a single family or small multi-family in the Northern Indiana or Southwest Michigan region - because that is where I am originally from. I know the area, and I have a lot of family there to help the process. Also, the numbers work. 

I have 10k currently saved, and it was my plan to save perhaps 10k more in order to have 20% down and the ability to buy something up to 100k. Right now I just wanted to start talking to lenders to get my facts straight and make sure I was on the right path. I've seen a few properties that caught my eye around 50-60k also, and I know I'm close to having the down payment in that bracket. 

The lender says that for investment properties, they require 25% (not that shocking)  but we could apply for a "second home loan" which only required 10% down. She mentioned because my family is in the area, and because I mentioned that perhaps one day I could use the property as a vacation rental (and would be using it myself from time to time) that it qualified. I made sure she understood that I don't actually own a first home, and she said that was fine. 

I also questioned:  "But, I can rent it out in the mean time? This isn't like ... illegal?" and she confirmed it was not. She noted I would just need to most likely write a letter of intent to eventually move to the property in the future...even if that might not ever happen. 

I guess technically it's not really lying. That is a possibility in 30 years or something. 

Well ... as I thought more it felt weird, and I came on here to do some further research. I've only seen one post and it mentioned that you must live in the second residence for X amount of time out of the year. Do these things just depend on the lender? 

Any way, sorry for the long question, but any help you could share will be greatly appreciated. 

Thanks kindly in advance!