Can You Buy a Second Property with 5% Down?

Many people don’t realize you can buy a second home or vacation home with as little as 5% down.

This option is available through the Vacation / Secondary Home Program, which allows qualified buyers to purchase a second property for personal use, either for yourself or an immediate family member.

It’s important to know this isn’t for rental properties. If you’re planning to rent the home full-time, you’ll need at least 20% down and a different type of mortgage.

Now, not every second home qualifies for 5% down. Properties are divided into two categories: Type A and Type B.

Type A homes are more like typical houses or cottages with year-round access and standard services.
Type B homes are more seasonal — they might not be winterized or have full road access in the winter — and they require a larger down payment.

Type A Properties (Secondary Homes)

Type A properties qualify for 5% down, as long as they meet standard requirements.
Here’s what a Type A property usually looks like:

• Year-round road access (even in winter)

• Permanent foundation and permanent heat source

• Drinkable running water (well, municipal, or properly filtered lake/river water)

• Electrical power

• Good quality construction with no major maintenance issues

Type A homes are the most common for people buying a second home close to work, a cottage that's easy to access year-round, or a place for family.

Type B Properties (Vacation Homes)

Type B properties are a little more flexible but usually require 10% down.
They allow for more seasonal or rustic setups:

• Seasonal access (road may not be plowed in winter)

• Floating foundation (e.g., blocks instead of full basement)

• No permanent heat source needed (wood stove or fireplace is fine)

• Running water required, but it doesn’t have to be drinkable

• May be accessible only by boat

Type B properties are more like traditional summer cottages or seasonal cabins.

A Few Other Things to Know

• The property must be occupied by you or an immediate family member, not rented.

• You can only have one Sagen-insured second property per applicant.

• Maximum property value is $1,000,000 if you’re putting less than 20% down.

• Standard income and credit requirements apply. (Minimum 600-680 credit score depending on the situation.)

Ineligible properties include rental pool units, investment properties, and timeshares.

Final Thoughts

Buying a second home or vacation property doesn’t always mean you need a huge down payment.

If the property fits the program guidelines and you meet the basic credit and income requirements, buying with 5% or 10% down could be within reach.

[If you want to check if a property qualifies, click here to start a quick pre-approval.]

Frequently Asked Questions (FAQ)

Can I buy a cottage with 5% down?
Yes, if it’s a Type A property with year-round access and full services. Seasonal cottages (Type B) usually require 10% down.

Can I rent out my second home?
No, the Vacation/Secondary Home Program is only for properties occupied by you or a family member. Rentals require a different mortgage.

What’s the difference between Type A and Type B properties?
Type A homes are year-round, winterized, and have full services. Type B homes are more rustic, seasonal, and flexible, but need a bigger down payment.