Second Home or Investment Property? The Loan Rules for a Beach Place

A lot of buyers looking near St. Augustine or Vilano Beach have the same question: is this our place, or a rental? To your lender, that is not a lifestyle question. It is a loan category, and it changes the numbers.

What makes a home a "second home"

Fannie Mae's rules set out what counts. A second home has to be occupied by you for some part of the year, has to be a single unit, and has to be suitable for year-round living, not a seasonal camp (Fannie Mae Selling Guide B2-1.1-01). You also need to keep exclusive control over it. It cannot double as a rental property or a timeshare, and it cannot sit under a management agreement that controls when and how it is occupied (same guide).

An investment property is simpler to define: you own it, but you do not occupy it (Fannie Mae Selling Guide B2-1.1-01).

Why the label changes your down payment

Both categories ask for more down than a primary residence, and investment asks for more than second home. Per the Fannie Mae Eligibility Matrix dated August 5, 2026, the maximum loan-to-value on a one-unit purchase is 90% for a second home and 85% for an investment property (Eligibility Matrix). In plain terms, that is at least a 10% down payment on a second home and at least 15% on an investment purchase, before you even get into pricing.

Pricing is part of the story too. Fannie Mae applies a loan-level price adjustment, a fee built into the rate or closing costs, to every investment property loan and to some second home loans (same guide). Ask your loan officer to show you both the second home and investment numbers side by side before you decide how to structure the purchase.

Can rent count toward qualifying?

This is where the two categories really split.

On a second home, you can still collect rent when you are not using it, but Fannie Mae will not let that rental income help you qualify for the loan (Selling Guide B2-1.1-01). The loan has to work on your income alone.

On an investment property, rental income from the home itself can count, per Selling Guide B3-3.8-02, which covers one- to four-unit investment properties (and two- to four-unit primary residences).

What about short-term rentals?

If the plan is Airbnb-style nights instead of a long-term lease, the rule narrows further. Short-term rental income, meaning stays typically under 30 days, can only be used to qualify on a one-unit investment property, not a second home, per Selling Guide B3-3.8-03. The property also has to be legally allowed to operate as a short-term rental, including any local registration and licensing (same guide).

That legal-to-operate piece matters in Florida. State law generally keeps local governments from banning vacation rentals outright or capping how often they can be rented, except in places with rules already on the books before June 1, 2011 (Fla. Stat. 509.032(7)). But every short-term rental still needs a state license as a public lodging establishment (Fla. Stat. 509.241). No license, no counting that rent on the loan application.

Picking the right label for your file

The honest answer to "which one is this" usually settles the loan category on its own. If you and your family will actually use the place several weeks a year and just rent it out the rest of the time, second home fits, and you keep the lower down payment, but the rent stays off your application. If the plan from day one is to rent it out and visit rarely if at all, it is an investment property, with a bigger down payment but the ability to count that rent.

Picking the wrong label to get a smaller down payment is not a shortcut. It is a misrepresentation on a federally backed loan, and lenders check occupancy after closing.

Next step

Looking at a place near St. Augustine, Vilano Beach, or elsewhere in St. Johns County and not sure which category it falls into? Call Jason at 904-389-4635 and walk through how you actually plan to use it. We will run the numbers both ways so you know the real down payment and the real payment before you write an offer. For the loan programs we run across the county, see our St. Johns County and Ponte Vedra home loans page.