Buying a second home might sound like a luxury — but with the rise of short-term rentals (STRs), it’s become a strategic wealth-building move for everyday investors. The trick? Knowing how to finance it creatively and affordably. In this post, we’ll break down how to “house hack” your way into a vacation rental by using second-home loans, HELOCs, and owner-occupied financing strategies.
At its core, house hacking means using your property to generate income and offset your living or ownership costs. In the STR world, this often looks like:
It’s a hybrid approach — half lifestyle, half investment — and when done right, it makes owning a vacation rental far more accessible.
One of the most common — and often overlooked — ways to finance a vacation rental is a conventional second-home loan.
Key Requirements:
📌 Pro Tip: Most lenders will still allow you to rent the property out when you’re not using it — even on Airbnb or VRBO — as long as it meets the “second home” intent.
Benefits:
✅ Best For: Buyers who want a hybrid lifestyle/investment property they can enjoy and rent.
If you already own a primary residence with equity, this could be your launchpad.
Home Equity Line of Credit (HELOC):
A revolving credit line you can draw from as needed — think of it like a giant credit card secured by your house.
Home Equity Loan:
A lump sum loan that gives you all the funds up front at a fixed interest rate.
Why It Works:
📌 Example: Let’s say your primary home is worth $500,000, and you owe $300,000. You could potentially access up to $100,000 in equity (depending on lender limits).
✅ Best For: Homeowners with strong equity looking to avoid touching savings.
Here’s a curveball: Buy the home as a primary residence and live in it for at least 12 months. After that, convert it to a rental.
How It Works:
This strategy opens doors for first-time investors or those with limited capital.
📌 Caution: Misrepresenting occupancy is mortgage fraud. Only use this strategy if you genuinely plan to live in the home for the first year.
✅ Best For: Buyers who can work remotely or relocate and want to start small.
| Strategy | Down Payment | Interest Rate | Rental Allowed? | Key Perk |
| Second Home Loan | 10%+ | Low | Part-time OK | High loan limits, low rates |
| HELOC / Home Equity | Varies | Medium | Yes | Tap into equity, fast access |
| Owner-Occupied Purchase | 0–5% | Very Low | After 12 months | Ideal for beginners, low cost |
💼 Example Scenario: $500K Vacation Rental Purchase
Financing a vacation rental doesn’t have to feel like a stretch — you just need to approach it like an investor, not a dreamer. Whether you’re tapping equity, living in your investment, or leveraging a second-home loan, the key is strategic intent.
And remember: The best financing strategy is the one that aligns with your lifestyle, risk tolerance, and long-term STR goals.
Ready to run numbers on a deal? Start with a property that has strong cash flow potential and work backward into the best financing path for you.
👉 Next up: “DSCR Loans Demystified: How They Work (And Why STRs Are a Perfect Fit)” — coming right up.
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