Dreaming about a weekend place at Dillon Beach or along the Marin coast, but unsure how the financing works for a second home? You are not alone. Coastal properties can be unique, and lenders look closely at how you plan to use the home, the loan size, and local risks. In this guide, you will learn how second-home loans are classified, what down payment and reserves to expect, and which local issues can affect your approval and rate. Let’s dive in.

What counts as a second home

Lenders group properties by how you will use them: primary residence, second home, or investment. A property typically qualifies as a second home when you intend to use it for your own personal stays and it is not your primary residence. If you plan to rent the home frequently, especially on short-term platforms, many lenders will treat it as an investment property.

Conventional financing for second homes follows the rules in the Fannie Mae Selling Guide and the Freddie Mac Single-Family Guide. These programs allow second-home loans subject to documentation and lender rules. Some lenders set stricter standards than the agencies. Guidance from the Consumer Financial Protection Bureau also helps explain how vacation homes are viewed. If your use leans toward frequent rentals, expect the loan to be priced and underwritten as an investment.

Loan options on the Marin coast

• Conventional conforming loans. A strong fit when the loan amount sits within conforming limits and your use meets second-home rules. You can check current limits through the Federal Housing Finance Agency.
• Jumbo loans. Common on the Marin coast where prices often exceed conforming caps. Jumbo programs are lender-specific and usually call for higher credit scores, larger reserves, and sometimes bigger down payments.
• Portfolio lenders and local banks. These lenders keep loans on their own books and may be more flexible with unique coastal properties, septic systems, or access issues. Terms vary by institution.
• FHA, VA, USDA. These programs have occupancy rules that generally do not support vacation-home use. VA requires occupancy as a residence. USDA is for rural primary residences only.

Down payments and reserves to expect

Agency guidelines can allow second-home purchases with down payments starting around 10 percent in some conforming cases. In practice on the Marin coast, many lenders prefer or require 15 to 25 percent down for second homes. Investment properties often need 15 to 30 percent down. For jumbo loans, expect higher down payment targets if the property is older, atypical, or has coastal risk factors.

Lenders also look for cash reserves after closing. For second homes, six months of PITI is common to see, and investment properties can require six to twelve months. Jumbo programs may ask for even more. Reserves matter on the coast because insurance and maintenance costs can run higher, and some areas have seasonal usage or special assessments.

What affects your rate and approval

Rates typically follow a pattern. Primary homes price best, second homes a bit higher, and investment properties higher still. Jumbo loans often add their own pricing spread and tighter credit standards. Your credit score, total debt-to-income, loan-to-value, and available reserves all influence the final rate.

Key terms in plain English

• LTV, CLTV, HCLTV. Loan-to-value measures your loan amount compared to the property value. Lower LTV often gets better pricing. CLTV and HCLTV add in any second liens.
• DTI. Debt-to-income is the share of your gross monthly income used to pay debts. Lower DTI improves eligibility.
• PITI. Principal, interest, taxes, and insurance. Lenders use PITI to size required reserves and budget your monthly cost.
• Occupancy affidavit. A signed document stating how you will use the property. Be accurate and consistent with the loan type.
• Seasoning. How long you have held funds or assets. Lenders review this for large deposits and down payment sources.
• Overlays. Lender rules that are stricter than agency minimums. Overlays are common in coastal markets and for unusual properties.
• Appraisal and comps. In low-sales coastal areas, appraisers may have limited comparable sales. This can lead to more conservative values.
• Title and access. Lenders want marketable title and year-round access. Private roads or easements often need documentation.

Local Dillon Beach issues lenders check

Property systems and access

Many Dillon Beach and west Marin cottages are older, modest in size, and may rely on septic and well systems. Lenders often request septic and well certifications, proof of permits, and confirmation that systems meet local health standards. Private-road access, maintenance agreements, and year-round access are also important. Unpermitted work or nonstandard structures can delay funding until resolved.

Appraisals and comparable sales

Inventory can be tight and sales seasonal. Appraisers may need to use broader comps or adjust more heavily, which can result in conservative values. If the appraisal comes in low, you may increase your down payment or renegotiate with the seller to keep the deal on track.

Insurance and hazard risks

Some properties sit in FEMA Special Flood Hazard Areas. If so, your lender will require flood insurance. Use the FEMA Flood Map Service Center to check flood zones and learn about coverage through the National Flood Insurance Program. Coastal wind exposure, roof conditions, and older construction can raise premiums or require upgrades to bind coverage.

Coastal erosion and sea-level rise are part of long-term planning and can influence insurability and resale over time. While not always a direct underwriting item, you should consider potential future costs and disclosures.

Coastal rules and permits

Dillon Beach and much of west Marin fall under county jurisdiction and the coastal zone, which can involve county rules and oversight by the California Coastal Commission. Zoning, septic regulations, coastal development permits, and local fee districts can affect financing timelines and closing costs. The Marin County site is a good starting point for planning, permit history, and district contacts.

Your financing checklist

Be ready with documentation early. Common requests include:

• Credit and income. A recent credit report, W-2s, pay stubs, and two years of tax returns if you are self-employed or have complex income.
• Assets and down payment. Bank and investment statements showing funds and any gift documentation, plus evidence of reserve balances after closing.
• Property items. Appraisal, general inspection, septic and well certifications where applicable, preliminary title, road maintenance agreements, proof of insurability, and any flood determinations.
• Occupancy intent. A signed occupancy affidavit and clarity on any rental plans. If rentals will be frequent, expect investment treatment.

How to vet your lender

Ask targeted questions to avoid surprises later:

• Experience. Do you regularly finance second homes in Dillon Beach or west Marin? What timelines should I expect?
• Product fit. What are your requirements for conforming, jumbo, and portfolio second-home loans? How do down payment and reserves change by product?
• Rental treatment. If I plan occasional rentals, will you treat this as a second home or investment? What documentation do you require?
• Property risks. What do you need for septic, well, or private-road properties? What issues could delay or stop funding?
• Overlays and pricing. What lender overlays apply beyond agency rules, and how do they affect my rate and costs?
• Process clarity. What is your typical clear-to-close timeframe here? Can I see a Loan Estimate and fee sheet upfront? What are your lock and float-down policies?

Local banks and credit unions can be adept with coastal quirks and portfolio loans. Mortgage brokers can shop multiple jumbo and second-home programs but confirm they know coastal appraisal and underwriting. National lenders may offer sharp pricing on plain-vanilla conforming loans and can work well if the property is straightforward.

Strategy and timeline tips

• Build in time. Allow extra time for septic or well inspections, flood-zone checks, and appraisal reviews if comps are thin.
• Be flexible on funds. You may need larger reserves and a higher down payment than the agency minimum, especially for older cottages or jumbo loans.
• Clarify use early. Decide whether your plan fits second-home standards or leans investment. This drives loan type, pricing, and documentation.
• Line up insurance. Start insurance quotes early, including flood if applicable, so your lender can review coverage before final approval.
• Work with coastal experts. Choose an agent and lender who understand local permitting, access, and insurability. That reduces surprises and keeps your deal moving.

Next steps

A second home on the Marin coast can be a smart lifestyle purchase when you plan your financing with coastal realities in mind. Set expectations for down payment and reserves, match the right loan product to your intended use, and get ahead of property-specific items like septic, access, and flood coverage. With a prepared file and the right local partners, you can navigate underwriting with confidence.

If you would like introductions to experienced local lenders, inspectors, and coastal resources, reach out to CoastalAgent. We offer relationship-first guidance and practical support to help you buy with clarity.

FAQs

How are second-home loans different from investment loans on the Marin coast?

• Second homes are for personal use with limited rental activity, often allowing lower down payments and reserves than investment loans, which carry stricter terms and higher pricing.

What down payment is typical for a Dillon Beach second home?

• While some agency options start lower, many lenders in this area expect 15 to 25 percent down for second-home purchases, and more for investment or jumbo loans.

Do I need flood insurance for a coastal property in Marin?

• If the home lies in a FEMA Special Flood Hazard Area, lenders will require flood insurance, and it is wise to check maps and quotes early in the process.

How many months of reserves should I plan for on a second home?

• Many second-home loans call for about six months of PITI in reserves, while investment and jumbo programs may require six to twelve months or more.

Will a septic system or private road block my loan in west Marin?

• Not necessarily; lenders usually require certifications, proof of code compliance, and road maintenance agreements to confirm year-round access and system viability.

Can I rent my Marin coast second home on a short-term basis?

• Occasional rentals may still fit second-home rules, but frequent short-term rentals often trigger investment classification, which changes eligibility and pricing.