Minnesota Second Home Loans and Mortgage Solutions

Frequently Asked Questions

What are the requirements for a second home loan in Minnesota?

Minnesota second home loans follow Fannie Mae’s national guidelines. The home must be a single-unit property, livable year-round, and used personally by the borrower for part of the year. The property can’t be a timeshare or primarily used for rental income. Most lenders require 10–20% down, strong credit, and documented income. Minnesota does not add additional lending requirements, but local zoning rules or HOA restrictions may affect how the property can be used. BNB Lending helps assess whether your second home plans align with conventional financing standards.

How do short-term rental rules impact loan classification?

If a property is regularly rented out on a short-term basis, it may not qualify for second home loan status and might need to be financed as an investment. While Minnesota has no statewide law regulating STRs, cities like Minneapolis and St. Paul require licenses and apply local lodging taxes, which can be around 8.875%. The state also collects income taxes on rental earnings. At BNB Lending, we evaluate your intended use and location-specific regulations to ensure you choose the right mortgage type and remain in compliance.

Do second homes qualify for property tax breaks in Minnesota?

Minnesota second homes do not receive a homestead exemption. All real estate is taxed at full assessed value, with the classification rate for STRs typically at 1.0% to 1.25%. In cases where the property has fewer than four units and is rented more than 14 days annually, the rate on the first $500,000 in value is capped at 1.25%. While relatively modest compared to national averages, tax amounts can still vary widely by county. BNB Lending helps you understand Minnesota’s local assessment rules so you can accurately plan your total ownership costs.

Can I deduct mortgage interest on a second home?

Mortgage interest on a second home is generally deductible at both the federal and Minnesota state level if you itemize. The property must be used for personal occupancy, and if it's also rented out part of the year, the deduction may need to be prorated. Minnesota allows deductions in line with federal limits but doesn’t offer additional second-home incentives. BNB Lending ensures your mortgage structure preserves potential tax benefits and encourages you to speak with a CPA familiar with state-specific rules to ensure full compliance.

Are there second home loan programs in Minnesota?

Minnesota Housing programs are intended only for primary residences. These offerings are targeted at first-time homebuyers, veterans, and income-eligible residents and do not extend to second or vacation homes. For buyers seeking a part-time retreat, BNB Lending provides flexible second home loan options across Minnesota. From lakefront getaways to urban escapes, we help structure financing that complies with state property classifications, STR rules, and occupancy criteria—all while providing competitive terms and personal support.

What types of properties qualify for second home loans?

Second homes must be one-unit residences that are livable year-round and used primarily for personal occupancy. These may include detached homes, townhomes, or condos. The property cannot be a timeshare or multi-unit structure. In Minnesota, some local governments apply stricter regulations to STR use, which can affect zoning and financing status. At BNB Lending, we evaluate your property’s intended use and location to ensure it meets second home loan requirements and avoids reclassification as a commercial or investment property.

Who benefits from choosing a second home loan over an investment loan?

These loans are perfect for self-employed individuals, LLCs, and investors managing multiple properties. If you plan to use your Minnesota home primarily for personal stays and only rent it occasionally, a second home loan may offer better rates and terms than an investment loan. These loans must be in your personal name—not held by an LLC. BNB Lending structures Minnesota second home loans to provide flexibility while keeping your financing compliant with lender and zoning guidelines.

Thinking beyond Minnesota? Explore Airbnb loans and second home opportunities in nearby states like Wisconsin or North Dakota to expand your portfolio.