In many ways, second home purchases are similar to the primary home purchase. Realtors say putting 20 percent down or more is common for second homes to avoid the expense of mortgage insurance and given today's tightened lending practices. "It's possible to buy a true second home with 5 or 10 percent down, but it's tricky," says Ruth Krinke, RSPS (Resort & Second Home Property Specialist), associate broker with Steamboat Real Estate in Steamboat Springs, Colo.

When it comes to negotiating, second home sellers may be more flexible than their primary-home counterparts. "Second home sellers are often more flexible in price and terms of sale. They may want out because they are overextended or their lifestyle has changed," Greenstein says.

To move the sale along, buyers can request special terms of the seller. For example, as an incentive, sellers might be willing to carry a second mortgage for three to five years, Traverso says. "Sometimes banks will accept 10 percent from the seller when the buyer puts down 10 percent. The seller may take on a burden to get the deal done when banks will only loan 80 percent of the value of the home."

Consider these tips when investigating your financing options:

• For mortgage financing, use a local lender in the area you are buying, Traverso says, because its expertise and knowledge of the market can avoid problems later;
• Stricter guidelines are involved in qualifying for a mortgage for an investment property. Typically, borrowers pay a higher interest rate;
• If you do need the rental income to qualify for the loan, you may need a minimum of 25 percent down, Krinke says. Lenders tend to give credit for up to a 75 percent occupied rate;
• Other forms of financing include tapping into your primary home's equity line of credit, known as HELOCs.

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