When people search for second home mortgage rates or current second home mortgage rates, they usually expect to see numbers that are noticeably higher than what they would pay on a primary residence. That assumption has been correct for years. In Texas, under the right structure, it does not have to be.

During the pandemic, something unusual happened in mortgage pricing. Rates on primary residences and second homes were often the same. There was little to no spread. As a result, we saw a surge of buyers purchasing lake houses, beach homes, and weekend properties across Texas. The math made sense, and people acted on it.

When markets normalized, that spread came back. Second homes were once again priced 0.75% to 1.00% higher than primary residences. The appetite for vacation properties did not disappear, but the financing advantage did. For many buyers, the numbers stopped working the way they had just a year earlier.

For years after that reset, buying a second home meant accepting worse mortgage pricing. Second mortgage rates on vacation properties consistently trailed primary residence pricing, and mortgage rates for a second home were almost always higher than what borrowers saw advertised for owner-occupied purchases. Lenders treated vacation homes and lake properties as higher risk. The rate difference was not subtle. In most conventional markets, a second home carried a pricing hit of 0.75% to 1.00% compared to a primary residence. Sometimes more once adjustments stacked.

That spread changed the math. A beach house in Galveston or a lake home near Austin stopped feeling like a lifestyle decision and started feeling like a financial penalty.

Now, Texas residents have access to a structure that brings back much of that lost advantage.

There is a portfolio lending structure available for second homes located in Texas that allows qualified borrowers to obtain the same mortgage rate as a primary residence when putting 25% down. When putting less than 20% down, the adjustment is only 0.25%.

That gap matters. It changes monthly payments. It changes long-term cost. It changes whether the purchase makes sense.

And it is not something most retail lenders advertise.

Why Second Home Mortgage Rates Are Normally Higher

If you compare primary home pricing with second home interest rates or vacation home mortgage rates, the spread becomes obvious. The conventional market builds in adjustments that push second home mortgage interest rates higher than standard owner-occupied loans.

In the conventional lending world, second homes are priced with added risk adjustments for two main reasons: financial exposure and housing policy priorities.

First, there is simple balance sheet risk. A borrower with two mortgage payments is statistically more leveraged than a borrower with one. If income is disrupted, lenders assume the primary residence gets paid first and the vacation home payment becomes secondary. That layered obligation is viewed as incremental risk, and it gets reflected directly in pricing.

Second, during periods of housing affordability strain, agency pricing has leaned toward favoring primary residence and first-time homebuyer demand over discretionary second home purchases. When inventory is tight and affordability is stretched, policymakers tend to push capital toward owner-occupied housing rather than vacation property. Rate adjustments are one way that preference shows up.

The practical result is predictable. A borrower qualifying at 6.25% on a primary residence might see 7.00% or worse on a second home. If the property is a condo, adjustments stack. If the down payment is lower, pricing moves further away. Reserves often increase. Underwriting tightens.

On a $700,000 lake house, that difference can add hundreds of dollars per month. Over time, it can translate into tens of thousands of dollars in additional interest.

Most buyers assume that is simply how second home financing works.

In the conventional market, it usually does. But that is not the only market available.

The Texas Portfolio Structure That Changes Pricing

Instead of accepting whatever 2nd home mortgage rates today happen to be through large retail lenders, Texas buyers have another path. Portfolio lending changes how second home mortgage rates are calculated because the lender is not required to apply the same agency-level adjustments that dominate the conventional market.

Certain Texas-based portfolio lenders do not rely on Fannie Mae or Freddie Mac for these loans. They hold them in portfolio. Because of that, they are not bound by the standard second home rate adjustments that dominate the conventional market.

When structured at 75% loan-to-value, meaning 25% down, second homes located in Texas can receive identical pricing to primary residences under this program.

When the loan exceeds 75% LTV, the rate adjustment for a second home is only 0.25%.

Compare that to the typical 0.75% to 1.00% market spread and the difference is substantial.

This is not a teaser structure. These are fully underwritten purchase transactions using 5/6 or 7/6 ARM products with standard credit, income, and asset documentation. Loan amounts can be conforming or jumbo. Properties must be located in Texas. Borrowers must qualify.

The advantage comes from how the loan is sourced and structured.

What This Means for Austin Buyers

Austin homeowners often look beyond city limits for lifestyle property. Lake Travis. Lago Vista. Spicewood. Marble Falls. Horseshoe Bay. These are not speculative purchases. They are weekend homes, family gathering spots, places to escape the heat and noise.

Under traditional second home pricing, an Austin buyer purchasing an $850,000 property in Lago Vista with 25% down could have been forced into a rate nearly one percent higher than their primary residence. That difference could add $400 or more to the monthly payment.

Under this portfolio structure, that same borrower may receive primary residence pricing at 75% LTV.

The conversation shifts from "Can we justify the rate difference?" to "Does this property fit our long-term plans?"

That is a different decision.

Houston Buyers and Coastal Property

Houston professionals regularly look toward Galveston, Jamaica Beach, Surfside, Crystal Beach, and Lake Conroe. These are common second home markets for families who want a short drive to water.

Coastal property often compounds the rate problem because condo pricing and second home adjustments stack together. Traditional lenders may layer pricing hits for occupancy, property type, and loan-to-value.

When the second home adjustment largely disappears at 25% down, financing becomes more predictable. Buyers can evaluate the property itself rather than navigating penalty pricing.

In markets where sellers are negotiating and inventory has expanded, competitive financing can be the difference between acting now or waiting indefinitely.

Dallas and North Texas Lake Communities

Dallas buyers frequently purchase second homes at Cedar Creek Lake, Possum Kingdom Lake, Lake Texoma, Lake Ray Hubbard, and Lake Granbury. These markets are driven by accessibility and long-term use, not short-term speculation.

When second home rates mirror primary residence rates at 75% LTV, the holding cost of that property becomes far more manageable. Buyers who intend to keep the home for years benefit from a lower starting rate and greater flexibility to refinance later if market rates fall.

This is particularly relevant in a market environment where many buyers are waiting for rate movement. Locking in favorable portfolio pricing now while retaining refinance flexibility later is a strategy, not a gamble.

25% Down vs. Less Than 20% Down — What Actually Changes

The real decision point in this structure is not whether 0.25% sounds small. It is how dramatically the pricing improves once you cross the 75% loan-to-value threshold.

At 25% down (75% LTV), the second home receives identical pricing to a primary residence. There is no second home rate penalty.

If a borrower puts less than 20% down and moves above 75% LTV, the adjustment is only 0.25%.

Compare that to the standard market where the second home spread is often 0.75% to 1.00% worse than primary residence pricing regardless of down payment. That is where the advantage becomes clear.

On a $600,000 loan amount, the difference between no adjustment at 25% down and a typical 0.875% market adjustment can mean several hundred dollars per month. Even at less than 20% down, a 0.25% spread is materially better than what most lenders price for second homes.

In other words, 25% down removes the penalty entirely. Less than 20% down keeps the penalty minimal. Either scenario is a significant improvement over conventional second home pricing.

Mortgage pricing is leverage. Small spreads create large long-term differences.

Why Access Matters

This program is not broadly distributed through retail banks or national call centers. Portfolio products are typically offered through wholesale channels, and those channels are accessed by mortgage brokers who work directly with the lenders providing these structures.

Retail rate sheets are generally standardized. Large banks price off internal overlays and agency grids. Loan officers at call centers can only offer what sits on their corporate rate sheet. If a product does not fit that box, it does not get presented.

Portfolio exceptions are different. They require lender relationships, scenario discussions, and a willingness to structure around opportunity rather than defaulting to agency pricing.

Borrowers who only shop large direct lenders may never see this option. They will assume the 0.75% to 1.00% second home spread is universal because that is all they were shown.

It is not universal. It is simply the most common.

This is where a broker model matters. A mortgage broker is not tied to one bank’s pricing grid. The broker shops wholesale lenders, regional banks, and credit unions that hold loans in portfolio. The broker evaluates which investor makes sense for the borrower’s exact scenario — credit score, down payment, property type, reserves, and long-term plan.

At LendFriend Mortgage, that access is the advantage. We operate in the wholesale channel, which means we see programs most retail branches do not promote. When a portfolio lender prices second homes like primary residences at 75% LTV, we can structure the file accordingly. When a credit union offers a favorable ARM structure for Texas properties, we can position the loan to fit.

The result is not just a better rate sheet. It is broader optionality. Instead of asking, "What does this one bank offer?" the question becomes, "Which lender is best for this specific deal?"

That difference in access is often worth more than the spread itself.

When you are financing a second home — whether it is a Lake Travis property, a Galveston beach house, or a Cedar Creek Lake retreat — the structure matters as much as the rate. Brokers bring access. LendFriend brings that access to Texas buyers every day.

A Practical Example

Assume a $800,000 purchase price on a second home in Texas.

With 25% down, the loan amount is $600,000.

If standard market pricing imposed a 0.875% second home adjustment and the portfolio structure removed it, the monthly savings could exceed $350 depending on market rates.

Over the initial fixed period of a 5/6 ARM, that could represent more than $20,000 in interest savings.

That is not marginal improvement. That is structural improvement.

Which Texans Are a Good Fit for this Strategy

This structure makes sense for Texas residents who:

Have strong credit and stable income. Plan to hold the property for several years. Understand adjustable-rate mechanics. Want a Texas-based second home rather than an out-of-state vacation property. Value long-term ownership over short-term rental speculation.

It is particularly attractive for professionals in Austin, Houston, Dallas, and San Antonio who want a second property within driving distance.

Owning in Lago Vista while living in Austin. Owning in Galveston while living in Houston. Owning at Cedar Creek Lake while living in Dallas. Owning at Canyon Lake while living in San Antonio.

These are practical lifestyle moves, not abstract investments.

The Bottom Line

When people look up mortgage rates for second homes, they are usually preparing themselves for a worse outcome than their primary residence financing. That expectation is built on years of conventional pricing policy.

For Texas residents buying a second home in Texas, that expectation can be outdated.

Second home mortgage rates do not have to carry the traditional penalty most buyers assume is unavoidable.

For Texas residents purchasing second homes located in Texas, 25% down can eliminate the standard rate gap. Even lower down payments may only trigger a modest 0.25% adjustment.

That pricing difference changes payment structure, holding cost, and long-term strategy.

In a state where lake property, coastal homes, and Hill Country retreats are part of everyday life, access to primary residence pricing on a second home is not a small detail.

It is the difference between waiting and acting.

All rates quoted are as of 2-25-26 and subject to change. This program is available to Texas residents purchasing second homes located in Texas. Not all applicants will qualify. Loan terms subject to change based on applicant qualifications.