Buying A California Vacation Home Got More Expensive

Are you dreaming of owning a vacation home in California? Well, brace yourself for some not-so-good news. The Federal Housing Finance Agency has announced new upfront fees for second-home loans, which will make purchasing an investment property or a second home more expensive. So, if you’re planning to buy a second home, it’s a good idea to seek advice on how these fees will impact your purchase.

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Based on the loan-to-value ratio, the new fee increases for second-home loans will range between 1.125 percent and 3.875 percent. The FHFA says this is a step towards ensuring equitable and sustainable access to homeownership for first-time buyers, low- and moderate-income buyers, and to improve its regulatory capital position over time. These rates will take effect on April 1.

Buying a second home is generally considered a luxury purchase, and saving up for it has never been more critical than now. With the new fee increases, it will be more difficult for buyers who want to do an 80 percent (i.e., 20 percent down), 85 percent, or 90 percent purchase of a second home.

In summary, if you’re planning to buy a vacation home or investment property, be aware of the new upfront fees for second-home loans. Seek advice to understand how these fees will impact your purchase. It’s also important to save up for your second home purchase, as the new fee increases will make it more difficult to get financing.

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