Do Investment and Second Home Properties Get Higher Mortgage Rates?
Yes, both second home and investment property mortgages typically cost more than a primary-residence loan, in interest rate, in loan terms, and in down payment requirements, with investment properties costing more than second homes. A second home commonly adds roughly 0.5 to 1.0 percentage point over a primary-residence rate, and a rental or investment property commonly adds another 0.5 to 1.0 point beyond that, along with a bigger down payment and a lower maximum loan-to-value limit, as of July 2026.
Last updated July 22, 2026Why do these properties cost more to finance?
Lenders view a home you do not live in as a bigger risk. If money gets tight, borrowers are statistically more likely to keep paying on the house they actually live in and let go of a second home or rental property first. Mortgage investors build that risk into pricing through loan-level price adjustments that raise the rate or fees on non-owner-occupied and second-home loans compared with an otherwise identical primary-residence loan.
How much higher is the rate, really?
For a standard first-lien purchase loan or rate-and-term refinance, the typical premium is modest, roughly 0.5 to 1.5 percentage points total above a comparable primary-residence rate. As a general guide as of July 2026, first-lien purchase and cash-out refinance rates commonly run in the 6% to 7% range, with second-home and investment-property loans priced toward the higher end of that band or slightly above it. Wider spreads, sometimes cited as several percentage points above a primary residence, mostly show up in second-lien financing (like a standalone home equity line), non-traditional income-based loans, or short-term bridge financing, not in typical first-lien purchase or refinance pricing.
What about down payment and loan-to-value limits?
Down payment minimums and maximum loan-to-value (LTV) ratios are also stricter. A primary residence can sometimes be financed with as little as 3% down. A second home commonly requires around 10% down, and a single-unit investment property commonly requires around 15% down, rising to around 25% for a 2 to 4 unit investment property. Maximum LTV limits follow the same pattern, generally landing around 75% for investment properties versus 80% or higher for a primary residence.
It depends on your situation
- Occasional-use second home vs. rental property: the label matters. A home you and your family sometimes use is priced and underwritten differently than one you rent out for income, so tell your lender upfront how the property will actually be used.
- Purchasing or doing a standard rate-and-term refinance: expect the modest 0.5 to 1.5 point range described above, layered on top of current market rates.
- Tapping equity through a cash-out refinance on the investment property: this route is typically cheaper, in rate, than a standalone line of credit on that same property, though it still costs more than a cash-out refinance on a primary residence.
- Tapping equity through a standalone home equity line or loan on the investment property: this is where pricing spreads widest. As a general range, home equity lines run roughly 7% to 12% depending on credit and LTV, and many lenders commonly price standalone equity lines on investment properties toward the higher end of that range, above what an otherwise similar owner-occupied HELOC would cost.
- Non-traditional or short-term financing (income-based loans, bridge loans): these carry the widest premiums of all, since underwriting is more specialized and less standardized than a typical first-lien loan.
| Primary residence | As low as 3% |
|---|---|
| Second home | Around 10% |
| Investment property, 1 unit | Around 15% |
| Investment property, 2-4 units | Around 25% |
Related questions
Sources
- https://singlefamily.fanniemae.com/media/9391/display
- https://selling-guide.fanniemae.com/sel/b2-3-01/general-property-eligibility
- https://www.investopedia.com/loan-level-price-adjustment-llpa-definition-7498880
- https://sf.freddiemac.com/general/maximum-ltv-tltv-htltv-ratio-requirements-for-conforming-and-super-conforming-mortgages
- https://singlefamily.fanniemae.com/media/20786/display
- https://themortgagereports.com/27698/investment-property-mortgage-rates-how-much-more-will-you-pay
- https://www.rocketmortgage.com/learn/investment-property-vs-second-home
- https://www.lendingtree.com/home/mortgage/down-payment-for-rental-property
- https://www.refiguide.org/heloc-on-investment-property
Educational information only, not individualized financial or legal advice. Program details and rates change; verify current terms with a licensed loan officer before making a decision.