Buying a Second Home in Sonoma County

 Sonoma County is home to rolling vineyards, beautiful weather and an abundance of sights, sounds, tastes and smells to delight the senses. From shopping to dining to exploring the breathtaking landscape and of course, visiting the region’s numerous wineries, Sonoma County is a popular vacation destination. Because of this, many people choose to invest in a second home in Sonoma County.

If you’re considering the purchase of a second home, Sonoma County certainly has plenty of attractions to make it your ideal home away from home. Or, if you’re thinking about purchasing a second home to rent out to vacationers, Sonoma County is a wonderful location sure to attract a multitude of short term renters.

In today’s post, we’ll look at the basics of buying a second home and what you might expect to see in Sonoma County’s second home market.

Why Sonoma County?


As previously mentioned, Sonoma County is a popular place for vacationers. Sonoma Wine Country, as the area is known, is located just north of San Francisco’s Golden Gate Bridge. A traveler’s dream and a wine-lover’s paradise, this region is home to more than 425 wineries, plus miles of rugged yet gorgeous Pacific coastline and is within close proximity to San Francisco and all the city has to offer.

Whether you’re looking for your ideal vacation spot you can return to year after year, or you’re thinking of renting it out to other vacationers for additional income (or both), Sonoma County is a great place to realize your dreams of owning a second home in an idyllic location. Learn more about Sonoma County tourism here.

Basics of Buying a Second Home


Purchasing a second home is really not much different than purchasing a primary residence. There are a few key differences, however, mainly having to do with your DTI and LTV ratios. For loans on primary residences, there tends to be more flexibility in programs for people with higher DTI and LTV scores.

If you need a refresher, DTI stands for Debt To Income and is a number that represents the amount of debt you have in contrast to your income. To calculate your DTI, you simply take your total debt figure and divide it by your income. For example, if your debt costs $2,000 a month and your monthly income is $6,000, your DTI is $2,000/$6,000 or 33%.

LTV stands for Loan To Value and is a number that represents the percentage of the home’s price that you will be financing. For instance, if you’re making a 20 percent down payment, your LTV would be 80%.

Some loans allow higher DTIs and LTVs but only for primary residences. For example, FHA loans allow up to 96.5% LTV (3.5% down), but that is strictly for a home that is used as the borrower’s primary residence. Likewise, FHA and other government-backed loans typically allow higher DTI ratios, but again, it’s usually for primary residences.

For second home loans, most lenders want to see an 80% LTV or lower. As for DTI, the requirements depend on the size of the down payment and credit score. For example, Fannie Mae allows a DTI of up to 45% with a 660 FICO and at least 25% down.

Remember, how you’re planning on using the home will affect your DTI. Meaning, if you’re planning to rent the home out to short term vacationers, you may be able to add the projected rental income to your overall income. If you’re planning on simply using it as a vacation home for your own private use, your DTI will depend solely on income sources other than the property.

We understand researching second home financing can be confusing or overwhelming. Let us answer your questions and help you compare rates and programs to find a home financing option that works best for your scenario.

Ready for more information? Call (800) 405-7941 to speak with one of our mortgage professionals.