Dreaming of a weekend place by the Pacific, but unsure how the financing works outside your primary home loan? You are not alone. Buying a second home in Bandon feels different because lenders view vacation and rental use through a different lens, and coastal properties come with their own underwriting, insurance, and appraisal questions. In this guide, you will learn the key loan types, down payment and reserve expectations, what affects your rate, and how short‑term rental plans may change your path. Let’s dive in.
Second home vs. investment property
How a lender classifies your Bandon purchase sets the rules for pricing, down payment, and reserves.
- Second home: You use the property for personal stays and do not operate it as a primary rental business. The home is suitable for year‑round occupancy. Pricing is more conservative than a primary residence but better than an investment loan.
- Investment property: You purchase mainly to rent, whether long‑term or as a short‑term rental. This category carries higher down payments, stricter reserves, and higher rates than second homes.
- Primary residence: Where you live most of the year. This is the most favorable category, but it does not apply if the home will be a vacation place.
If you expect meaningful short‑term rental activity, your lender may treat the home as an investment even if you also plan personal use. Policies vary by lender, so it is important to clarify classification up front.
Common loan options for Bandon
- Conventional loans: Conforming programs are widely used for second homes and investment properties. Terms vary by occupancy, loan amount, and your credit profile.
- Jumbo loans: If your loan size exceeds conforming limits, underwriting is tighter. Expect higher down payment and reserve requirements, and potentially higher rates than conforming loans.
- Government loans: FHA, VA, and USDA focus on primary residences and are generally not used for second homes or investment properties in Bandon.
- Portfolio lenders and local banks: Some offer custom programs for unique coastal homes, but they may require larger down payments and carry higher rates.
Short‑term rental use is a nuance. Some lenders allow only limited, incidental rentals on second homes. Others will require investment underwriting for any STR activity. Counting projected STR income toward qualifying usually requires established rental history and documentation.
How much cash you should plan for
Your cash to close and post‑closing reserves depend on occupancy, credit, and the property.
What drives your interest rate
Several factors influence pricing for a Bandon second home.
- Your profile: Higher credit scores tend to get better pricing. Conventional second‑home programs commonly reward mid‑700 scores. Debt‑to‑income caps often fall in the 43 to 50 percent range depending on compensating factors. Strong liquid assets and reserves can help.
- Loan and property: Lower LTV generally improves pricing. Jumbo loans usually carry a premium compared to conforming. Occupancy matters, with investment pricing higher than second home pricing. Property type and condition can drive extra scrutiny, especially for condos or unusual construction.
- Coastal risk and insurance: Lenders will confirm adequate insurance, including flood or wind coverage if needed. Higher premiums can affect affordability and underwriting approval.
Documentation by borrower type
Lenders want to see stable income and assets. The paperwork differs for W‑2 and self‑employed buyers.
W‑2 and salaried buyers
- Recent pay stubs covering 30 days.
- Employer verification.
- W‑2s for the last 2 years.
- Bank statements for the last 2 to 3 months.
- Documentation of other income such as bonuses, overtime, or retirement, typically with a 2‑year history.
Self‑employed buyers
- Personal tax returns with all schedules for the last 2 years, plus business returns for corporations or S‑corps if applicable.
- Year‑to‑date profit and loss statement and balance sheet. Some lenders want CPA‑prepared numbers.
- 1099s if applicable and business bank statements, commonly 2 to 12 months.
- Alternative documentation loans may be available with higher rates, larger down payments, and more reserves.
Using rental income to qualify
- Long‑term rental income often requires two years of tax returns. Lenders commonly use 75 percent of gross rental income to account for vacancy and expenses.
- STR income is treated conservatively. Many lenders require at least a year or two of documented history, management or booking statements, and tax returns, and some do not use projected STR income at all.
Asset sourcing and seasoning
- Gift funds can be acceptable with a gift letter and documentation from the donor. Retirement accounts can count as reserves and sometimes for down payment, subject to documentation and any penalties. Proceeds from a home sale or asset sale need proof of terms and net proceeds.
Quick explainer: second home vs. investment
- Second home: personal use, year‑round habitable, limited incidental rental use only. Lower down payment and reserve needs than investment in many cases.
- Investment: primary purpose is rental income. Expect higher down payment, stricter reserves, and higher rates.
Quick explainer: W‑2 vs. self‑employed
- W‑2: 2 years of W‑2s, 30 days of pay stubs, employer verification, and recent bank statements.
- Self‑employed: 2 years of personal and business tax returns, year‑to‑date P&L and balance sheet, and business bank statements.
If you plan to use the home as an STR
Your STR plan can change underwriting and economics.
- Classification: Many lenders classify STR‑intended homes as investment properties unless you can show limited rental use with clear owner occupancy. Get the classification in writing.
- Qualifying income: Projected STR income may not count unless you have documented rental history, management statements, and tax returns. Policies vary widely.
- Insurance: Many homeowner policies exclude business use. You may need endorsements or a commercial policy for STR coverage. Expect higher premiums.
- Local rules to confirm: Check City of Bandon and Coos County for permits, licensing, zoning, and any STR caps or lodging tax requirements. Also review HOA or condo bylaws, which may limit or prohibit STRs.
Appraisal, insurance, and title on the coast
- Appraisal realities: Coastal homes can be unique with limited comparable sales. Appraisals may take longer, and values can be adjusted to account for scarce comps. Appraisers will check access, condition, and any visible coastal erosion or seawall issues.
- Flood and wind coverage: If the home sits in a FEMA‑mapped flood zone, flood insurance will be required. Many coastal policies also carry wind or hail deductibles. Confirm coverage early so the premium can be included in your debt‑to‑income calculations.
- Title and HOA considerations: Coastal parcels can carry easements or water‑related rights that appear as title exceptions. Condos often require project approval for financing, minimum master insurance, and may have rental restrictions.
Documents to gather for a smooth start
Bring digital copies to your initial lender conversation.
- Two most recent years of tax returns. Include business returns if applicable.
- Two most recent W‑2s or 1099s and 30 days of pay stubs if W‑2.
- Year‑to‑date P&L, business license, and two years of business returns if self‑employed.
- Two to three months of personal bank statements, all pages.
- Recent statements for retirement and investment accounts.
- Government ID and Social Security number.
- Source of down payment, including gift letter and donor statements if applicable.
- Any rental contracts or STR management statements if you plan to use rental income.
- Mortgage statements for other properties and documentation of any debts.
Questions to ask lenders in Bandon
Use these to compare programs before you lock a rate.
- Do you offer second‑home and investment programs in Coos County, and which fit a coastal property like mine?
- Will you treat my planned STR activity as a second home or as an investment property, and can you confirm that in writing?
- What down payment and reserve requirements apply to my credit score, assets, and loan amount?
- What credit score and DTI thresholds do you use for second homes and for investment or STR loans?
- Will you count STR or projected rental income, and if yes, what documentation and history do you require, and what percentage will you use?
- Do you have any overlays for coastal properties, condos, or homes in special flood hazard areas?
- Are flood insurance and wind or hail endorsements required, and how will you handle escrows or any forced‑placed policies?
- What appraisal type will you require, and are there special forms for coastal homes?
- Do you limit the number of financed properties I can have?
- What are your estimated closing costs, and which fees are lender specific?
- How long is your rate lock, and do you offer a float‑down option?
- For condos or HOAs, what master insurance minimums do you require, and are STRs allowed under your guidelines?
Flood and insurance checklist
- Check whether the property lies in a mapped flood zone and budget for flood insurance if needed.
- Ask insurers about wind or hail coverage, deductibles, and any exclusions for coastal perils.
- If planning STR use, confirm you have proper endorsements or a commercial policy.
Steps to get preapproved in Bandon
- Clarify your use plan. Decide whether the home will be a pure second home or an STR, and share that plan with your lender.
- Gather documents. Pull two years of tax returns or W‑2s, recent bank statements, and details on any planned rental activity.
- Compare lenders. Include a local bank or credit union plus a mortgage broker who understands coastal underwriting and STR policies.
- Run the numbers. Ask for scenarios that show second‑home versus investment pricing, different down payments, and reserve requirements.
- Prepare for coastal due diligence. Price out insurance early, plan for a full appraisal timeline, and review HOA or title items that can affect financing.
Ready to explore your options?
Buying a second home in Bandon can be straightforward when you align the right loan type with your actual use, prepare your documentation, and budget for coastal insurance and appraisal realities. If you want a local team that understands both lifestyle and logistics, we are here to help you match financing with the right property and plan. Connect with Coast Properties Group | eXp Realty, LLC to talk through neighborhoods, insurance questions, and STR considerations, then start touring with a strong preapproval in hand.
Coast Properties Group | eXp Realty, LLC
FAQs
Can I use an FHA loan for a Bandon vacation home?
- FHA loans primarily serve owner‑occupied primary residences and are generally not used for second homes or investment properties.
Will lenders count short‑term rental income when I qualify?
- Many lenders are conservative and will only consider STR income with documented history such as tax returns and management statements, and some will not count projected income at all.
How much down payment do I need for a Bandon second home?
- Plan for 10 to 20 percent down for a conventional second home, with higher requirements for investment properties or jumbo loans depending on your profile and lender program.
Do I need flood insurance for a Bandon coastal home?
- If the home is in a FEMA‑designated special flood hazard area, lenders require flood insurance, and even outside mapped zones you may choose to carry coverage given coastal exposure.
Are coastal homes in Bandon harder to appraise?
- They can be. Unique features and limited comparable sales often mean longer timelines and more detailed appraisals, which can influence value and underwriting.
