What It Actually Costs to Close on a Second Home

The four things you are funding

1. The down payment

The largest piece and the one everybody plans for. On a conforming loan, Fannie Mae's Eligibility Matrix, August 2026 edition, lists 90% as the maximum loan-to-value for a one-unit second home purchase, which is a 10% minimum down payment. The down payment calculator turns that into real numbers against a price you enter, and the down payment guide covers what moves it.

Source: Fannie Mae Selling Guide, Eligibility.

2. Closing costs

These are the transaction costs of the loan and the transfer: appraisal, title work, lender charges, recording, and the settlement services. You will not be guessing at them. Two disclosure documents arrive on a schedule. A Loan Estimate comes early, and Residential Mortgage's published guidance describes the Closing Disclosure reaching you a minimum of three days ahead of the closing date. The second document exists so you can set the final charges against the earlier estimate and query anything that moved.

This site does not publish cost figures, and you should be wary of any that do. Closing costs vary by state, by property, by lender and by transaction. The disclosure documents you receive on your own file are the authoritative answer, and they arrive early enough to act on.

Source: Residential Mortgage, LLC published purchase process.

3. Prepaid taxes and insurance

At closing you typically fund an escrow account so that property taxes and homeowner's insurance can be paid when due. Residential Mortgage's published guidance places the insurance step during processing rather than at the end: you arrange the coverage yourself and evidence it to the lender well before the closing date.

On a second home this deserves more attention than it usually gets, because second homes cluster in places with real insurance exposure. Coastal wind, wildfire and flood all affect what coverage is available and on what terms, and in some markets the insurance question has become the constraint on the timeline rather than the loan. Start it earlier than feels necessary. The vacation home guide covers the property-side issues in more detail.

4. Reserves

Reserves are months of housing payments you can still cover from your own assets after closing, and they are not spent at closing. They have to exist and be documented. Loans run through Fannie Mae's Desktop Underwriter carry a two-month reserve expectation on a second home transaction, against six months on an investment property, which is one more place the occupancy classification shows up in practice.

Source: Fannie Mae Selling Guide B3-4.1-01, General Asset Requirements.

Where the money is allowed to come from

Every dollar has to be documented and traceable. Two things create more delay here than anything else: transfers between accounts in the weeks before application, each of which needs its own statement, and deposits with no obvious origin, which need an explanation and a paper trail.

Gift funds are permitted on a second home under Fannie Mae's Selling Guide, with a condition worth knowing in advance: where the loan-to-value is above 80%, the borrower contributes 5% from their own funds before gift money is applied. If part of your plan involves family help, that ordering matters.

If the plan is to draw on the equity in the home you already own, that is its own transaction with its own timing, covered in the equity guide.

Source: Fannie Mae Selling Guide B3-4.3-04, Personal Gifts.

Building your own figure

1. Run the down payment calculator against the price you are actually considering.
2. Add an allowance for closing costs and prepaid items, then replace that allowance with your real Loan Estimate as soon as you have one.
3. Confirm your reserves are documented and will survive closing.
4. Get an insurance quote early, especially in a coastal, wildfire or flood exposed market.

The result is a planning figure built from your own numbers, not a national average. Take that into the conversation, and see the documents guide for what to gather alongside it.

Common questions