Second Home vs Investment Property Rate Calculator
Fannie/Freddie price second homes much cheaper than investment property — 10% down vs 25%, and 0.5-0.75% lower rate. But occupancy fraud (rental disguised as second home) brings criminal penalties. This shows the legitimate cost gap.
| 2nd home down payment | — |
| Investment down payment | — |
| 2nd home loan amount | — |
| Investment loan amount | — |
| 2nd home monthly P&I | — |
| Investment monthly P&I | — |
| Lifetime extra cost — investment classification | — |
Fannie Mae and Freddie Mac classify properties as primary, second home, or investment — each with very different down payment, rate, and underwriting rules. Misclassifying to get cheaper financing (occupancy fraud) is a federal felony.
Second Home Definition
Per Fannie/Freddie: must be a 1-unit dwelling, suitable for year-round use, available exclusively for the borrower's personal use (no rental restrictions allowed by HOA/master deed), located a reasonable distance from primary residence, not subject to a rental pool agreement.
Investment Property Definition
Any property purchased for income generation — long-term rental, short-term rental, fix-and-flip. Down payment: 15-25% for 1-unit, 25%+ for 2-4 unit. Rate add-on: 0.5-0.75% above primary. PMI not available — all-cash equity required.
Rate and Down Payment Gap
Second home: 10% down typical, rate within 0.125% of primary. Investment: 20-25% down, rate 0.5-0.75% above primary. Combined gap: investment loans cost $200-400/mo more on a $400K loan plus $60-75K more cash at closing.
Occupancy Fraud Penalties
Lying on the 1003 mortgage application about occupancy is federal mortgage fraud. Penalties: lender demands full loan payoff (acceleration), federal criminal charges up to 30 years and $1M fines (18 USC §1014), permanent loan eligibility damage. Don't risk it.
Last updated May 2026. Sources: Fannie Mae Occupancy, 18 USC 1014.