Occupancy is one of the biggest risk factors lenders price, and the logic is simple: people protect the roof over their own head first. If money gets tight, the mortgage on the primary residence gets paid before the one on a rental or a vacation place. An investment property adds a second layer of risk: if the tenant stops paying, the owner is suddenly carrying a payment with no income behind it. Because non-primary homes default more often, they cost more to finance. Mechanically, that shows up through loan-level price adjustments (LLPAs) that Fannie Mae and Freddie Mac apply based on occupancy type, credit score, loan-to-value, and other factors. A second home or investment property carries a higher adjustment than a primary residence, and the fee is baked into your rate. Fannie and Freddie have at times raised those adjustments on second homes specifically to limit how much of their book goes to non-primary financing. Those schedules change, so confirm current pricing rather than relying on a figure you read somewhere. The secondary market drives this. It buys these loans and prices them by risk, so every lender lands in a fairly narrow range for a given occupancy and loan type, whether FHA, VA, conventional, or jumbo. If a quote on a second home or rental leads with paying points for a low rate, ask for the zero-point option too. We lean against points as a default, and the zero-point quote is the honest baseline for comparing real cost side by side.