Down Payment for Second Home Purchases in Palm Beach County: Occupancy Rules, Insurance and Rental Limits

The down payment for second home loans usually starts at 10% on a conventional loan, while a one-unit investment property usually needs at least 15%. That gap is why many buyers in Palm Beach County ask which label fits their plan. The answer depends less on price and more on how you will use the place. A second home is for you. An investment property is for tenants. This guide explains the down payment rules, the occupancy promises you sign, how to insure a home that sits empty part of the year, and the condo and city rental limits that can change your plan.

Key takeaways

• Fannie Mae's Eligibility Matrix (August 5, 2026) sets a 90% maximum loan-to-value for a one-unit second home and 85% for a one-unit investment property.
• Fannie Mae says a second home must be a one-unit home you occupy for part of the year, under your exclusive control, and not rental property or a timeshare.
• Rental income from a second home can't be used to help you qualify for that loan.
• Florida bars most new local bans on vacation rentals, but rules adopted on or before June 1, 2011 still stand, and condo rules can be stricter.
• Your homestead exemption only covers your permanent home, so a second home pays full property taxes.

Down payment for second home loans vs. investment loans

Lenders sort homes into three groups: a principal residence, a second home and an investment property. Each group has its own limits. Fannie Mae's Eligibility Matrix, dated August 5, 2026, lists these maximum loan-to-value ratios for a purchase.

• Principal residence, one unit: up to 97% on a fixed-rate loan, for borrowers who qualify.
• Second home, one unit: up to 90%, so the minimum down payment is 10%.
• Investment property, one unit: up to 85%, so the minimum is 15%.
• Investment property, two to four units: up to 75%, so the minimum is 25%.

These are program maximums. Your own lender may ask for more, depending on your credit, debts and reserves. In addition, Fannie Mae requires loan-level price adjustments on all investment property loans. In plain terms, an investment loan usually costs more than a second home loan with the same down payment.

Government-backed loans such as FHA and VA are generally built for a home you live in full time. So most second-home buyers use a conventional loan.

What counts as a second home

Fannie Mae's Selling Guide sets the test. A second home:

• must be occupied by the borrower for some portion of the year;
• is limited to a one-unit home;
• must be suitable for year-round living;
• must be under the borrower's exclusive control;
• must not be rental property or a timeshare arrangement.

Exclusive control matters a lot in a resort area. If a management company controls who stays in the home and when, the property may not qualify. Likewise, a condo-hotel unit in a rental pool usually does not fit.

Fannie Mae does allow some rental activity. If the lender finds rental income on a second home, the loan can still be a second home loan, as long as the income is not used to qualify and all other rules are met. That means you must be able to carry the payment on your own income.

The occupancy promise behind a second home down payment

At closing you sign papers that state how you will use the home. Treat those statements seriously. Calling a rental a second home to get a lower down payment or better rate is occupancy fraud. So pick the loan that matches your real plan.

If you plan to rent the home most of the year, an investment loan is the honest fit. If you plan to use it yourself for the season and maybe rent it now and then, a second home loan may work. Talk it through with your lender before you write an offer, since the answer changes how much cash you need.

How the down payment for second home buyers fits the local market

Palm Beach County prices give a sense of scale. In August 2026, the median single-family home in the county sold for $650,000, and the median condo or townhouse sold for $300,000, according to Miami Realtors. Condo supply sat at 6.7 months, compared with 3.5 months for single-family homes.

At those medians, a 10% down payment for second home buyers works out to about $65,000 on a house and $30,000 on a condo. An investment loan at 15% would raise those to about $97,500 and $45,000. Closing costs, prepaids and reserves come on top.

Prices also vary a lot by town. According to Pure Equity's MLS data as of October 1, 2026, the median list price was $859,495 in Jupiter, $278,000 in Delray Beach and $2,499,000 in Palm Beach. Those are asking prices of active listings, with condos and houses mixed.

Insuring a home that sits empty part of the year

A second home in South Florida often sits empty through the summer and fall. That is also hurricane season. So the insurance plan needs more thought than it would for a full-time home.

• Read the vacancy and unoccupancy wording. Many policies limit coverage for some losses if a home is left empty for a set period. Ask your agent how your policy defines it.
• Confirm wind and flood coverage. Wind may come with a separate deductible. Flood is a separate policy, and your lender may require it in a flood zone.
• Plan for storm prep. Someone needs to install shutters, clear the patio and check the home after a storm. Many owners hire a home watch service for this.
• Keep records. Photos and receipts make a claim easier when you are not on site.

For condo owners, the association's master policy covers the building, while your own HO-6 policy covers the inside of the unit. Our guide to buying a condo in Florida covers what to review before you buy.

Rental limits that can change your plan

Even a light rental plan runs into rules at three levels: the state, the city and the building.

State and city rules

Under section 509.032(7)(b) of the Florida Statutes, a local law may not ban vacation rentals or limit how long or how often they are rented. However, local rules adopted on or before June 1, 2011 are grandfathered. Some cities in Palm Beach County still have older rules. For example, Lake Worth Beach requires rental terms of 60 days or more.

If you do rent short term, the state may also require a vacation rental license from the Department of Business and Professional Regulation. In addition, Palm Beach County collects a 6% tourist development tax on rentals of six months or less.

Condo and HOA rules

Buildings often set tighter limits than cities. Many condos require minimum lease terms, cap the number of leases per year or require tenant approval. Under section 718.110(13), a new rental limit applies only to owners who agree to it and to owners who buy after it passes. So if the limit is already on the books when you buy, it applies to you.

Ways to fund the down payment for a second home

Most buyers pull the cash from savings or from the sale of other assets. Others tap equity in their main home through a cash-out refinance or a home equity line of credit. That can work, but it adds a new payment, and the lender for the second home will count it in your debts.

Also plan for reserves. Lenders often want to see savings left over after closing, and the amount can be higher for a second home than for a main home. Ask early so you don't spend money you will need to show later. If you have equity in your main home, our HELOC calculator gives a rough idea of what you could borrow against it.

Taxes on a second home

The homestead exemption in Florida only covers your permanent residence. The Palm Beach County Property Appraiser requires you to be eligible as of January 1 and to file by March 1. Since a second home is not your permanent home, it does not get that exemption. It also misses the homestead cap on yearly assessment increases. Build the full tax bill into your budget, and ask a tax advisor about how mortgage interest and any rental income are treated for your situation.

Frequently asked questions

What is the minimum down payment for second home loans?

On a conventional loan that follows Fannie Mae rules, the maximum loan-to-value for a one-unit second home is 90%, so the minimum down payment is 10%. Lenders can require more.

Can I rent out my second home?

Some occasional renting may be allowed, but the home must stay under your control and the rent can't be used to qualify. If renting is the main plan, an investment loan is the right fit.

Can an FHA or VA loan lower the down payment for a second home?

These programs are generally meant for a home you live in full time. Most second-home buyers use a conventional loan instead.

Can a condo stop me from renting my unit?

Yes, if the rule is in place when you buy. Florida law applies new rental limits only to owners who agree and to later buyers, so read the rules before you sign.

Does a second home get the homestead exemption?

No. The exemption covers only your permanent residence in Florida.

Sources

• Fannie Mae Selling Guide, B2-1.1-01 Occupancy types
• Fannie Mae Eligibility Matrix (August 5, 2026)
• Miami Realtors, Palm Beach County August 2026 market report
• Florida Statutes, section 509.032
• Florida DBPR, Vacation rental licenses
• Palm Beach County Tax Collector, Tourist development tax
• City of Lake Worth Beach, Vacation and short-term rentals
• Florida Statutes, section 718.110
• Palm Beach County Property Appraiser, Homestead exemption

This article is general information, not legal, tax or financial advice. Loan rules and local ordinances change, so confirm the details with your lender, insurance agent, attorney or tax advisor.

Thinking of selling your seasonal home? We can price it against current Palm Beach County sales and plan the listing around your time in town. Check what your home is worth or talk with a listing agent. Buying a second home? Schedule a buyer strategy call and we will screen buildings for rental and insurance rules first.