Under Fannie Mae rules, a second home is a one-unit home you live in for part of the year, that can be lived in year-round, and that you alone control. It cannot be a rental, a timeshare, or run by a management company that controls who stays there. An investment property is a home you own but do not live in. On a standard Fannie Mae purchase loan, a second home needs at least 10% down. A one-unit investment property needs at least 15% down, and a 2 to 4 unit investment property needs at least 25% down.
Some buyers want a getaway near family in Franklin. Others want a rental in Nashville. How you plan to use the home decides which rules apply. Be honest about it. The occupancy you choose is a promise on your loan papers.
| Rule | Second home | Investment property |
|---|---|---|
| Who lives there | You, for some part of the year | You do not live there |
| Number of units | 1 unit only | 1 to 4 units |
| Most you can borrow on a purchase | 90% of value (10% down) | 85% for 1 unit (15% down); 75% for 2–4 units (25% down) |
| Gift money allowed? | Yes (5% of your own funds first if over 80% loan-to-value) | No |
| Seller credit limit | 3% if over 90% LTV; 6% at 75.01–90%; 9% at 75% or less | 2% |
| Temporary rate buydown (like a 2-1)? | Allowed | Not allowed |
| Rental use | Cannot be a rental or timeshare; rental income cannot be used to qualify | Rental is the point |
| Extra pricing (LLPA) | Applies to certain second-home loans | Applies to all investment loans |
These are Fannie Mae's standard limits for loans run through its Desktop Underwriter system. Other loan types, like DSCR loans, follow their own rules.
Buying a rental instead? Read what a DSCR loan is or see investment property loans.
Fannie Mae says it is a one-unit home you live in part of the year, that can be lived in year-round, and that you alone control. It cannot be a rental or a timeshare.
On a standard Fannie Mae purchase loan, at least 10%. The most you can borrow is 90% of the value.
On a standard Fannie Mae purchase loan, at least 15% for one unit and 25% for two to four units.
A second home cannot be a rental property. Fannie Mae says if some rental income shows up, it cannot be used to help you qualify, and all second-home rules must still be met.
Gifts are allowed for a second home. Fannie Mae does not allow gifts for an investment property.
Yes, but Fannie Mae limits seller help to 2% of the price or value, whichever is lower, on investment properties.
Not sure if your Middle Tennessee purchase counts as a second home or an investment? Call me at (615) 495-6594, email travis@heathrowmtg.com, or start an application.
Figures checked October 11, 2026. Rules and rates can change. Examples are for illustration only and are not a loan offer.
