Buying a Second Home in Durango: What to Know Before You Shop

Every fall I talk with people who are thinking about a place of their own in the mountains: a cabin near Purgatory, a home on the lake at Vallecito, or a condo in town for weekends and visits with family. I have lived in Durango for more than 29 years, and helping people buy their getaway home here is some of my favorite work.

Financing a second home works a little differently than buying the house you live in. Here is what I walk every second-home buyer through before they start shopping.

Second home or investment property?

This is the first question I ask, because lenders treat the two very differently. In general, a second home:

• Is a one-unit home you personally use for part of the year
• Is suitable for year-round living, not a seasonal-only cabin
• Stays under your control, not in a rental pool or timeshare arrangement
• Can sometimes be rented occasionally, but that rental income usually cannot be used to qualify

If you plan to rent the home most of the time, an investment-property loan may be the better fit. My second home loans page covers the options for each. Getting this right before you write an offer matters, because it affects which loan programs are available to you.

Mountain properties come with their own checklist

Durango-area homes can raise questions you do not run into in a typical subdivision. I help buyers look at these early:

• Condos: the HOA budget, insurance and rental rules can affect which loans are available
• Short-term rentals: city, county and HOA rules if you plan to rent occasionally
• Cabins and rural homes: road access, well and septic, and year-round suitability
• Insurance: wildfire coverage can affect your costs, so get a quote early

Using what you already own

Many second-home buyers use equity in their primary home toward the purchase. Depending on your situation, that could mean a cash-out refinance, a home equity line, or simply using savings. Each option has trade-offs, and I am happy to lay them side by side.

What you will need to get pre-approved

• Recent pay stubs, or tax returns if you are self-employed or retired
• Statements for bank, investment and retirement accounts
• Your current mortgage statement
• A photo ID

Higher-priced mountain homes sometimes call for a jumbo loan. Like a broker, I shop multiple lenders, including jumbo lenders, so you can compare real options.

Still comparing mortgage lenders in Durango? See how working with one local lender lets you compare multiple lenders for your situation.

Planning to rent it sometimes?

If you hope to rent the home some of the time, check the short-term rental rules first. The City of Durango and La Plata County each have their own vacation rental rules and permits, and HOAs often add more.

Buying from out of state

Many of my second-home clients live in Arizona, Texas, New Mexico, California or Florida. Most of the process can be done from home: applications, document uploads and e-signing. I coordinate with your agent, the title company and the appraiser here, and you can sign closing documents locally or with a mobile notary near you when the title company allows it.

Ways to finance a Durango second home

• Conventional second-home loans for most purchases up to the conforming limit.
• Jumbo second-home loans for higher-priced homes. See my jumbo loan guide.
• Equity from your current home. A HELOC or second mortgage on your primary residence can cover a down payment or a full purchase, depending on your equity and goals.
• Condos near Purgatory and in town. Project rules matter. See my condo loan guide.

Mountain homes with wells, septic or private roads have their own checklist; my rural mountain home guide covers it. You can also compare me with other mortgage lenders in Durango CO.

Have questions about your own situation? Call me at 970-828-1610 or book a time to talk. There is never any cost or obligation.

Peter Pritchard, NMLS #404172 | Animas Mountain Mortgage Inc., NMLS #1742747 | 1099 Main Ave, Ste 305, Durango, CO 81301 | Equal Housing Opportunity. This article is general information, not a commitment to lend. Loan approval depends on credit, income, property and program guidelines.