What defines the difference between a second home and an investment property

The borrower's intent of the property

James: it is Intent and where the home is compared to where you live and work currently. If you already live near where the home you want to purchase is located, you'll possibly need to convince an underwriter why you intend to use that home for vacation or other purposes. If you intend to rent it, that has to be disclosed or potentially the the loan could be investigated for possible mortgage fraud. I've had customers who had a country home and a city home roughly 40 miles apart but the standard is 50 miles unless the home is located in a "resort" or vacation area.

To be considered a Second Home, the property needs to be considered Significantly Remote from the primary residence. Some great examples are a cabin in the woods, condo in the city for entertaining clients, known resort areas, beach/lakefront, etc. In general, it's usually 50+ miles from your primary residence.

A Investment property receives reant. A 2nd home does not

If you intend to rent it out, it is an investment property. It can be a 1 to 4 unit building. Fannie Mae defines a second home as meeting the following requirements:Second Home Requirements must be occupied by the borrower for some portion of the year;is restricted to one-unit dwellings;must be suitable for year-round occupancy;the borrower must have exclusive control over the property;must not be rental property or a timeshare arrangement;cannot be subject to any agreements that give a management firm control over the occupancy of the property

Investment property produces rental income. A second home is a home away from home.or a partime resident.

All good answers, but in general, if you purchase a property as a 2nd home, but you intend to rent it out 1 day of the year, then it's technically an investment.. to be considered for a 2nd home purchase, the property typically has to be 50+ miles away from your primary residence and will not be rented out. If you have any reservations about renting out your 2nd home, it's best you disclose it as an investment. All loan fraud is investigated by the FBI, and there are severe penalties and/or prison time if found guilty.. it's best you be safe than sorry.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com