If you purchase the home as a second home, then NO you cannot rent it out. That is a provision of the loan. That is the difference in the methods. The second home is for your own use and th investment property is generally for rental or commercial use.

The down payment requirements may vary greatly between a second home purchase and a rental as may the closing costs. Investors consider the purchase of investment property a higher risk than that of a second home and price the loan accordingly.

To qualify as a second home purchase, it has to make sense. For instance, buying a home in another part of town and calling it a second home doesn’t make sense. Buying a home in the mountains or at the coast when you live in the city does.

Telling your lender that it is a second home purchase and then using the property as a rental is loan fraud.

In the lender’s eyes, an investment property is much riskier to provide financing for than a second home. However, you cannot just call it whatever you want to try to save a buck.

As Mazziatplay stated, it has to make sense. A second home would typically be in a vacation area, for instance. If it is less than a few hours away, why would you need a second home there? These are the type of questions that the lender will ask.

There is a reason for the three types of classification of your residence. If you’re untruthful on your application, it is fraudulent, no if’s, and’s, or but’s…

Second home rates are as good as primary residence rates. Investment property rates are higher. The property must qualify as a second home… this is not for you to decide, but for the Lender to decide which guidelines it meets. Typically it’s a second home if it’s in a resort area and 300+ miles from your primary residence.