Buying a Vacation or Second Home in Florida: What You Need to Know in 2026
Buying a Vacation or Second Home in Florida: What You Need to Know in 2026
Florida remains one of the most popular vacation and second home markets in the country — but financing a second home works differently than financing the home you live in, and Florida has its own property tax and insurance realities that catch a lot of buyers off guard. Here's what actually matters before you make an offer. NMLS #137512.
Get Pre-Approved — It's FreeA second home mortgage is not the same product as the loan on your primary residence — the down payment is higher, the rate is a little higher, and the underwriting rules around occupancy and rental use are genuinely stricter. On top of that, Florida has property tax rules that specifically exclude vacation homes from the same protections your primary residence would get, plus insurance realities that are simply bigger here than almost anywhere else in the country.
We've seen strong, steady second home activity across our Florida markets — buyers securing a Gulf Coast condo, a Jacksonville-area beach house, or a Sarasota-area retreat. Here's what to know before you get too far into the process.
The Florida Tax Trap: No Homestead Exemption, No Save Our Homes Cap
If you've read anything about Florida property taxes, you've probably heard of the homestead exemption and the Save Our Homes cap — both of which can save primary Florida homeowners real money over time. Neither one applies to a vacation home, second home, or investment property. Only your primary residence qualifies.
Instead, Florida vacation homes fall under what's called the non-homestead assessment cap — a separate, less generous protection that limits your assessed value from increasing more than 10% per year (compared to the 3% or CPI, whichever is lower, that primary homesteaded residences get). And when you first purchase the property, it gets reassessed to full market value the year after the sale — there's no cap in your first year of ownership.
What This Actually Looks Like in Dollars
Say you buy a $500,000 Florida vacation condo. In a strong market year, your assessed value could legally climb by as much as 10% — that's a potential $50,000 increase in taxable value in a single year, versus the 3% (roughly $15,000) cap a homesteaded primary residence would be protected by on the same value.
This compounds every year you own the property, since each year's increase builds on the last. We factor a realistic non-homestead tax trajectory into every Florida second home pre-approval so the number you plan around reflects reality, not just year-one taxes.
A Ballot Measure Worth Watching in November 2026
On June 2, 2026, the Florida Legislature passed a proposed constitutional amendment that would lower the non-homestead assessment cap from 10% down to 5%, effective January 1, 2027. It still needs voter approval this November before it becomes law. If it passes, buyers who close on a Florida vacation home in 2026 would see the tighter, more protective 5% cap apply going into 2027 — a meaningful long-term difference in carrying costs. Nothing to act on yet, but worth knowing as you think ahead.
Second Home Financing Rules in 2026
Beyond Florida's tax rules, the mortgage itself works differently than financing you're used to on a primary residence:
| Requirement | Second Home (2026) |
|---|---|
| Minimum down payment | 10% for well-qualified borrowers (90% max LTV on a purchase) |
| Minimum credit score | Typically 620–680 depending on the lender and pricing tier |
| Maximum DTI | 45%, including both your primary and second home mortgage payments |
| Cash reserves required | 2–6 months of payments, depending on credit and overall file strength |
| Distance from primary residence | No hard mileage rule anymore — underwriters look for genuine vacation/resort characteristics |
| Rental income used to qualify | Not allowed — you must qualify on your own income alone |
| Short-term rental (Airbnb/VRBO) allowed? | Yes, occasionally — as long as you keep exclusive personal-use rights and there's no mandatory rental pool agreement |
| Rate compared to a primary residence | Typically 0.25%–0.50% higher |
One rule worth clearing up: the old "must be 100 miles from your primary residence" guideline that used to define second home eligibility is no longer a hard requirement. Underwriters now look at whether the property genuinely fits a vacation or resort profile — waterfront, a coastal community, a seasonal area — rather than applying a strict mileage cutoff. That said, this rarely matters for Florida buyers anyway, since most are purchasing from well outside the state.
Second Home vs. Investment Property — Know the Difference Before You Apply
This distinction matters more than most buyers realize, because it changes your down payment, your rate, and how you're allowed to qualify:
- Second home: You personally use it for part of the year, it's not subject to a mandatory rental agreement, and you cannot use any rental income to help you qualify. Down payments start around 10%.
- Investment property: Purchased primarily to generate rental income, with a different LTV structure (typically requiring more down) — but rental income from the property can often be used to help you qualify, especially with DSCR loan programs.
- Florida condo-hotels and heavily rental-managed units: Some Florida coastal condo developments operate with mandatory rental pools or hotel-style management. These almost always get classified as investment or non-warrantable properties by lenders, with different terms — worth confirming before you fall in love with a specific building.
Insurance: The Real Budget Item Most Buyers Underestimate
This is genuinely the biggest surprise for out-of-state buyers purchasing a Florida vacation home. Florida homeowners insurance costs are among the highest in the country, driven by hurricane and wind exposure, and coastal or flood-zone vacation properties often sit at the higher end of that range. A few things worth planning for:
- Flood zone designation matters enormously — confirm it early, since flood insurance is often required separately from your standard homeowners policy in many coastal areas.
- Wind mitigation features (roof age, hurricane shutters, impact windows) can meaningfully affect your premium — older roofs in particular can be difficult or expensive to insure.
- Condo buildings carry their own master insurance policy on top of your individual unit policy, and Florida's post-Surfside condo law changes have driven insurance and reserve costs up significantly for older buildings — worth reviewing the association's financials before making an offer, not after.
We build realistic insurance estimates into every Florida second home pre-approval — not a generic national average — so your true monthly carrying cost is accurate from day one.
Don't Forget the Documentary Stamp Tax
Florida charges a documentary stamp tax of $0.70 per $100 of purchase price at closing — on a $500,000 vacation home, that's $3,500. In most Florida counties this is typically a seller expense, but it affects the overall transaction cost picture and is worth understanding as part of your total closing cost estimate.
Frequently Asked Questions
Can I claim Florida's homestead exemption on my vacation home?
No. The homestead exemption and the Save Our Homes assessment cap are both reserved exclusively for your one true, permanent primary residence in Florida. A vacation home, second home, or investment property does not qualify for either benefit, regardless of how much time you personally spend there each year.
How much can my Florida vacation home's property taxes increase each year?
Under the non-homestead assessment cap, your assessed value can increase by up to 10% per year (excluding school board taxes, which are not capped the same way). This is separate from and less protective than the 3%-or-CPI Save Our Homes cap that applies to primary homesteaded residences. A proposed constitutional amendment on the November 2026 ballot would lower this cap to 5%, effective January 1, 2027, if voters approve it.
Do I need 20% down to buy a second home in Florida?
No — conventional second home financing typically starts at 10% down for well-qualified borrowers, not 20%. That said, your rate and mortgage insurance requirements will vary depending on your down payment, credit score, and overall financial profile, so it's worth running your specific numbers rather than assuming a flat percentage.
Why is homeowners insurance so much more expensive in Florida?
Florida's hurricane and coastal wind exposure drives insurance costs meaningfully higher than most of the country, and flood insurance is often required separately in many areas regardless of your standard homeowners policy. Roof age, wind mitigation features, and flood zone designation all significantly affect your premium. This is exactly why we build realistic insurance estimates into every Florida pre-approval rather than relying on a generic national average.
Can I rent out my Florida vacation home on Airbnb and still finance it as a second home?
Generally yes, as long as you maintain exclusive personal-use rights to the property and it isn't subject to a mandatory rental pool or required rental management agreement. However, you cannot use projected rental income to help you qualify for the loan on a second home — that's only allowed for properties financed as investment properties. Some Florida condo-hotel developments with mandatory rental programs get classified differently, so it's worth confirming before you make an offer.
Thinking About a Florida Vacation Home?
Talk directly with Kirk or Ken. We'll build a realistic non-homestead tax trajectory and true insurance estimate into your pre-approval from day one, walk you through second home vs. investment property classification, and shop wholesale rates to find your best option.
Get Your Free Pre-Approval Today
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