All Forum Posts by: JD Smith

Fannie Mae doesn’t care what platforms that your second home is marketed on. Per Fannie Mae rules, you can rent out a second home, but you must stay there a minimum of 10% of the nights that it is rented. So if you rent it 250 nights a year, you would have had to stay in the property 25 nights.

Thanks Matt & Collin. So, it can be done just need to make sure to follow the rules.

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Quote from @Collin Hays:

Quote from @JD Smith:

What are the rules around purchasing a property using a second home/vacation property mortgage (10% down) and renting it out? What I've found so far is the property has to be self-managed for the first year and you either need to live in it 14 days or 10% of total days it was available to rent, whichever is greater. Is there anything else?

The self-managed part is easy enough to understand, but it's the "need to live in it" part that I am maybe not understanding. If we have the property available to rent for the entire year, then we'd have to go stay in it 36 days a year? Or is it only on days someone actually rented it, so out of the 365 total days we were only able to for 250 days which means we'd have to stay in it 25 days that year. How do you keep track of the days rented and the amount of time you'd need to spend there to make sure you are meeting the requirements? Is this also for the life of the loan or is it only for the first year?

Not looking to game the system and using the property for ourselves is part of the plan as it's where we normally vacation anyway, so considering that the 10% down payment is much more appealing if we are able to balance out the rules and keep the cash flow positive. We are also not to a point yet to talk to a lender and when we are we definitely will, which I'm sure they can also help navigate this and put us into a loan that meets what we're looking for.

A loan for a vacation rental is a commercial loan. If the loan is backed by the federal government, that means 20% down minimum. If you buy the home as a second home, with a 10% down loan, you are guaranteeing and warranting that you are not using it as a rental. If you do otherwise, you are lying to a financial institution, a serious federal offense.

If the loan is not backed by the fed, you can do whatever you and the bank agree to.

Thanks for the information Collin. I guess this adds even more confusion in that the second home requirements state renting it is fine as long as it follows the guidelines, not that it’s forbidden outright. But that’s assuming I understand the guidelines to begin with. 😆

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All Forum Posts by: JD Smith

JD Smith has started 1 posts and replied 3 times.

Post: Second Home/Vacation Property Loan (10% down) an option?

Post: Second Home/Vacation Property Loan (10% down) an option?

Post: Second Home/Vacation Property Loan (10% down) an option?