There’s no doubt going to the Mountains of NC is something I love to do. I don’t do it very often, but when I can get to Boone and Blowing Rock, Grandfather Mountain and the Highland Games or up to Banner Elk and one of the many Ski resort areas like Beech Mountain and Sugar – I’m all in! One of our friends is looking for Second Homes near Boone, NC and we had the chance to tag along this summer!
For purposes of the first part of this post, I’m referring to Second Homes near Boone, NC to mean a Vacation Home. Near the bottom, I will address purchasing an ADDITIONAL home in the area.
Boone is located just three hours from Raleigh, and two hours from Charlotte. The best part for us is that with the temperature at 104 in Raleigh, we were able to be in the Mountains by Lunch time, and enjoy 74 degrees! So relaxing! We sat outside and truly enjoyed it, before heading to Grandfather Mountain!
Unlike Asheville, that has many luxury hotels, the areas around Boone support boutique hotels and cottages. Airbnb now shows 45 rental opportunities, and if you are looking for 3 or more bedrooms, you can get a place in the summer for less than $350 a night. Depending on when you go, there are opportunities for your stay to be much cheaper. So, you can see why someone might be interested in a second home here. The area has that small town feel to it that many of us love.
Qualifying for Second Homes Near Boone, NC
Second homes might be able to make some money through renting it at times when you don’t want to be there, but we can’t count that income towards qualifying you for the home. Even if you buy a property that has been rented, and has rentals booked, you can’t use the income to qualify.
The mortgage interest rates for second homes are not higher than the going rate for primary residences, and the PMI rates are no higher. To qualify as a second home, the property must be located at least 50 miles away from your current residence.
You must make at least a 10% down payment for second homes near Boone, NC. If you make less than a 20% down payment you will be required to have Private Mortgage Insurance (PMI).
There are no down payment assistance programs for “Vacation” second homes – even if it is your first purchase. Down payment assistance programs, and most Government programs are reserved for primary residences. VA Home Loans can be used in special occasions to purchase a second home.
An Investment Property, which you would rent out all of the time, does require at least a 20% down payment, and the mortgage rates are somewhat higher.
The maximum loan limit for a Conforming loan for Second Homes near Boone is $453,100. With a 10% down payment that means the Sales Price “cap” would be just over $500,000. If you are looking for a home over the $500,000 range, and you don’t have substantial funds for a down payment, you can talk to us about Jumbo Financing. We have several programs for this that also have adjustable rates.
Tax Deduction For Second Homes Near Boone, NC
If you rent your second home out for more than 14 days a year, the IRS doesn’t consider it a second home any longer, and you might lose some tax benefits.
Under the 2017 Tax Cuts and Jobs Act, the Mortgage Interest Deduction allows a taxpayer to deduct the qualified interest on a principal residence and a second home. The tax deductible interest for primary and second homes is reduced from a maximum of $1,000,000 combined acquisition debt to a maximum of $750,000 combined acquisition debt for both the first and second homes.
Property taxes on first and second homes are deductible but limited to a combined maximum of $10,000 together with other state and local taxes paid.
The gain on a principal residence retained the exclusion of $250,000/$500,000 for single/married taxpayers meeting the requirements. Unchanged by the new tax law, the gains on second homes must be recognized when sold.
Can You Use FHA To Buy A Second Home Near Boone, NC
Let’s talk about a situation where you own a home near Boone, and decide that you want to buy another home (an additional home). We recently spoke with a family who want to buy another home in the Mountains, and use their current residence as Investment Property. The question was, “can you use FHA to buy a second home near Boone?” and the answer is yes. As long as your current mortgage is not a FHA loan, you can use a FHA loan to buy the new home.
You could also use a FHA Construction Loan to build a Dream Home!!! The maximum loan limit for FHA loan limit varies based upon the County in which you are buying a home. For Watauga County the maximum FHA loan limit is $294,515.
As long as the new home is going to be the principal residence, you can also use the NC Housing Finance Agency to help with down payment funds. You wouldn’t qualify for the $8000 program, as it is only for first time home buyers, but you could use the 3% or 5% program. Rates for these loans are slightly higher, and are set by the Agency.
Not all lenders offer the grant program (Quicken does not offer NCHFA Loans and the SECU doesn’t), so shameful plug – you should call us!
If you are using your current residence as Investment Property, AND you are going to be using FHA as your mortgage loan – we will be required to count the entire mortgage payment of both properties against you in qualifying.
If you are using your second home as a primary residence, and you apply for a Fannie Mae Conventional Loan, we can also use down payment assistance. With a a FNMA Loan, as long as we have a full year contract for the lease of the home, and the first month’s rent or a one month security deposit verified – we will be able to count 75% of the rent as an offsetting factor to the Mortgage Payment.
If you have questions about buying second homes near Boone, NC call Steve and Eleanor Thorne 919-649-5058 ! We do loans all over the state, and love helping folks find their dream homes!
I try and answer all questions :)