What your result means
The price above is the smaller of two ceilings: what your down payment covers at the minimum required percentage, and what your monthly payment capacity supports once your existing home's payment and other debts are already subtracted from your allowed debt-to-income (DTI) ratio, the share of your gross monthly income that lenders will let go toward debt. For most buyers who still carry a mortgage on a primary residence, the DTI ceiling binds first, because that existing payment already consumes a meaningful share of allowable debt before the new property is even considered.
Second homes and investment properties are not treated the same by conventional lenders. A second home must be reasonably distant from your primary residence, suitable for year-round use, occupied by you for part of the year, under your exclusive control, and not part of a rental pool or management agreement. An investment property is not owner-occupied and is expected to produce rental income; it carries a larger minimum down payment and stricter reserve requirements. If you have not settled on which one you are buying, see our guide to buying a vacation home.
Worked example
A household in Austin, Texas earning $180,000 a year, with a $2,500 monthly payment on their primary home, $400 in other monthly debts and $80,000 saved, is looking at a lake house near Marble Falls as a second home, not a rental. At a 43% back-end DTI limit, their $15,000 monthly gross income allows $6,450 a month of total debt. Subtracting the $2,500 primary payment, $400 in other debts and an estimated $500 a month for the new property's taxes, insurance and HOA leaves about $3,050 a month for principal, interest and PMI combined. Because the loan sits above 80% loan-to-value, PMI has to come out of that same $3,050 rather than sit on top of it: qualifying on the higher, more conservative end of the $174 to $347 a month PMI range, that leaves about $2,703 a month for principal and interest, which supports roughly a $417,000 loan at 6.75% over 30 years. Added to their $80,000 down payment (well above the 10% minimum commonly cited for a second home), the estimate lands around $497,000.
How this is calculated
| Occupancy type | Commonly cited minimum down |
|---|---|
| Second home | 10%, at strong credit and reserves |
| Investment property | 15 to 25%, commonly 20% in practice |
Figures reflect commonly cited conventional (conforming) 1-unit norms in the Fannie Mae Selling Guide, which is revised multiple times a year; always confirm current numbers with your lender before relying on them. PMI is shown as a labelled indicative range for second homes above 80% loan-to-value, not a quoted rate, but the price above is qualified using the higher, more conservative end of that range, because a lender counts PMI as part of the payment you must be able to afford, not as an extra on top of it. Loan-level price adjustments (LLPAs), which add to your rate based on occupancy type, credit score and LTV, are real and can be significant, but the current LLPA matrix is not independently verified for this page, so it is not included in the math; ask your lender for your exact adjustment. If your down payment and income together could support a price beyond this calculator's search range, the result says so rather than showing a number that looks precise but is not. Sources: Fannie Mae Selling Guide, Fannie Mae LLPA matrix.
What this calculator does not cover
It does not compute an exact PMI premium, since that depends on your credit score, LTV and insurer; it shows a labelled range instead and qualifies you on the higher end of it. It does not calculate LLPAs. It does not model closing costs, a home inspection, HOA transfer fees, flood insurance, or the SALT deduction cap on mortgage interest and property tax. It assumes a single conventional conforming loan; jumbo, FHA and VA loans have different rules and FHA/VA generally do not finance second homes or pure investment properties at all. Its price search stops at $50 million; if your numbers are large enough to hit that, the result says so instead of showing a precise-looking number. Once you own the place, the running cost calculator and our vacation home tax rules guide cover what happens next.
Questions
What is the real difference between a second home and an investment property?
A second home is one you use yourself for part of the year and control fully, with no rental pool or management agreement limiting your use. An investment property is not occupied by you and is expected to generate rental income; lenders require more down payment and reserves for it.
Why does my current home's payment matter for a second home purchase?
Lenders qualify you on total debt-to-income, which counts your existing mortgage payment alongside the new one. The higher your current payment, the less room remains for a second property.
Is 43% the actual DTI limit lenders use?
It is a commonly used ceiling, but it varies by loan program and by the lender's own automated underwriting result; some approvals go higher with strong compensating factors like reserves or a lower LTV.
Do I need PMI on a second home?
If your loan-to-value is above 80%, PMI is commonly required on a second home, priced somewhat higher than on a primary residence. This calculator shows only an indicative range, and qualifies your maximum price using the higher end of it, since a lender counts PMI as part of the payment you have to afford, not as an extra cost on top.
Are the down payment minimums guaranteed?
No. They are commonly cited conventional minimums as of this review date. Fannie Mae and Freddie Mac revise their guidelines multiple times a year, and individual lenders may require more.
Last reviewed 15 September 2026 against the Fannie Mae Selling Guide. Next review March 2027.
This calculator gives a general estimate from the figures you enter. It is not financial, tax, legal or mortgage advice. Rules change and personal circumstances matter, so confirm with a qualified professional before you act. See the full disclaimer.