Second home or investment property
The difference is not how often you visit. A second home, for Fannie Mae, is a one-unit property you occupy for part of the year, that is suitable to live in year-round, that you control exclusively, and that is not under a rental or management arrangement that controls who stays there.1 A place you rent out as a short-term rental through a management company does not qualify, however often you use it yourself.
If it does not meet that test, it is an investment property, and it has to be financed as one. Calling an investment a second home to get better pricing is occupancy fraud, and it is the kind that is easy to find afterwards. We will not do it, and you should be wary of anyone who suggests it.
What each needs down
| Conventional loan, fixed rate | Maximum loan-to-value | Minimum down payment |
|---|---|---|
| Second home, purchase | 90% | 10% |
| Investment, one unit, purchase | 85% | 15% |
| Investment, two to four units, purchase | 75% | 25% |
| Investment, one unit, cash-out refinance | 75% | — |
Fannie Mae eligibility matrix, effective August 5, 2026.2 These are the ceilings; your credit, reserves and the lender can set a lower one.
Why both cost more
Fannie Mae adds a loan-level price adjustment to every investment property loan and every second home loan, on top of the adjustments for credit score and down payment.3 It is one of the largest charges on its whole grid. On an investment purchase with 20 to 25 percent down it runs above three points of the loan amount, taken either as cost at closing or as a higher rate.3
That is why a quote on an investment property can look a full point or more above the rate you saw advertised. The advertised rate assumed a home you live in. It is also why a larger down payment matters more here than anywhere else: the adjustment steps down as the loan-to-value does.
When the conventional loan is not the right tool
A conventional investment loan is qualified on your income: your tax returns, your debts, your debt-to-income ratio. For a lot of investors that is exactly the problem — depreciation and write-offs that save on taxes make the income look too thin to qualify, and each new property makes it harder.
A DSCR loan is qualified on the property’s rent instead. It usually costs more than a conventional loan, and for an investor whose returns show strong income, conventional is usually cheaper. For one whose returns do not, DSCR is often the only loan that works. We price both.
Sources
These references support the factual explanations above. Where this page states a preference rather than a fact, it says so — those are our editorial judgement, not a claim that any one channel always costs less.
Next
DSCR loans: qualifying on the rentYour tax returns stay in the drawer. The question is whether the property pays for itself.Conforming, high-balance and jumboThe 2026 limits, and what actually changes as the loan gets bigger.Priced against your actual file
Mortgage insurance, loan-level adjustments and the loan limit all turn on your own numbers, and so does whether conventional or FHA comes out cheaper. Send us the basics and we’ll price both — no credit pull, and it commits you to nothing.