What is the difference between a vacation home and a second home?

A second home is typically thought of as a vacation home, or one you intend to use on a part-time basis. A second home must meet the following criteria to qualify for a second home loan: The property must be suitable for year-round occupancy, even if you only intend to use it part of the year.



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A vacation home is a property aside from one's primary residence, that is used mainly for vacationing. A vacation home is often located some distance away from the primary residence. A vacation property may also be rented out to produce additional income when it's not being used.

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But there are also cons:
  • It's expensive. Similar to your primary residence, you're going to be paying the mortgage, property taxes, insurance and utilities.
  • There could be unexpected expenses. Owning a home comes with unexpected expenses. ...
  • It requires time and effort to maintain. ...
  • The down payment could be substantial.


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Ultimately, whether or not a vacation home pays for itself depends on several factors such as location and rental income potential.

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What rules should all vacation rental homes have?
  • Do not exceed the number of people allowed. ...
  • Do not make noise during sleeping hours and do not disturb the neighbours. ...
  • Leave the house at check-out time. ...
  • Notify the person responsible for any damage or incident to the property.


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Many owners of vacation homes employ a local property management company to maintain their second home when they're away, whether they rent it out or not.

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6 Tips To Make Your Vacation Home Pay For Itself
  1. Rent your property short term. ...
  2. Handle your rentals yourself. ...
  3. Tax deductions. ...
  4. Buy your vacation home with your IRA or retirement account. ...
  5. Rent seasonally or long term instead of short term. ...
  6. Trade for services.


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For borrowers in the United States, the vacation home must typically be located at least 50 miles away from your primary residence in order to enjoy the “second home” classification that is coupled with a lower interest rate.

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Reasons for buying a second home vary, from recreation and vacation enjoyment to investment and development to retirement planning. With homebuyers enjoying an advantage in many markets, now may be the time to buy that second home.

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