Blue Hill, Deer Isle and Lubec real estate: Downeast Maine second home loans

Blue Hill village sits at the head of Blue Hill Bay with Blue Hill Mountain behind it, and it serves as the shopping and service center for the peninsula. Brooklin is at the southern end of that peninsula, facing Eggemoggin Reach, and it has a long history of wooden boat building. Castine is on its own peninsula at the head of Penobscot Bay, with Maine Maritime Academy on the hill above the harbor and many houses that go back a very long way.

Deer Isle is reached from Sedgwick over the Deer Isle Bridge, a narrow suspension bridge across Eggemoggin Reach that opened in 1939, and then a causeway from Little Deer Isle. That is the only road link, so everything on the island depends on it. Stonington is at the southern tip, a working fishing harbor where the mail boat leaves for Isle au Haut, which has no bridge at all.

Farther east the coast gets quieter and the drive gets longer. Machias is the Washington County seat, on the Machias River near where it meets the bay, and it is home to the University of Maine at Machias. Past Machias is the stretch people call the Bold Coast, with high cliffs and long gaps between villages.

Lubec is the easternmost town in the United States, with the red and white West Quoddy Head Light at the edge of town. The bridge out of Lubec goes to Campobello Island, which belongs to New Brunswick, Canada, so it has a border crossing at each end. I can only finance homes on the Maine side. Eastport is on Moose Island, joined to the mainland by a causeway, and it looks out on Passamaquoddy Bay and the Canadian islands beyond it.

If you are searching Hancock County or Washington County Maine real estate, or Downeast Maine real estate in general, the financing questions below apply to all of it. Mount Desert Island has its own page, since Bar Harbor and Southwest Harbor bring different issues; see my Mount Desert Island second home loans page for those.

My name is Travis Penny, and I am a mortgage broker licensed in Maine and Florida. Because I am not tied to one bank, I shop your loan across multiple lenders, and you deal with me the whole way through. I started in 2004 and I'm still here.

How you will use the place sets the loan type, so we start there. A second home loan is for a single unit house that you and your family spend time in yourselves. Letting it out for a few weeks while you are back home is generally fine. It stops being a second home if a rental pool or a property manager has control over when you are allowed to stay.

Lenders generally do not count the rent you expect from a second home when you qualify, so the payment has to work on your own income. If you really intend to rent the house out most of the season and lean on that money, I would treat it as an investment property. You put more down, and in exchange the rental income can be counted under program rules. A DSCR loan is one way to do that; DSCR is for investment property only and I offer it in 38 states. See my DSCR investor loans page for the details. Check the town's own rules on short term rentals before you plan around that income.

Access matters more here than almost anywhere in Maine. Deer Isle and Stonington connect to the mainland year round by bridge and causeway, so homes there generally finance like mainland homes. Island homes without a bridge are harder to finance and depend on the lender and the appraisal. Call me with the address and I'll check it.

A lot of shore property sits down a camp road or a shared gravel lane. Lenders ask who maintains the road and who pays for plowing and repairs. If there is a road association or a written maintenance agreement, get a copy from the seller early.

Many of the shingled places on the water were built as summer cottages: no insulation, no real heat source, water piped in from a line that gets drained every fall. A regular mortgage expects a house that can be lived in all year, with heat, utilities and access that works in winter, so a true seasonal cottage can be hard to finance this way. Tell me about the property before you pay for an inspection, and I will be straight with you about whether there is a path.

Almost nothing out here is on town water and sewer. A private well and septic are perfectly acceptable to lenders, but on an older property I would test the water and have the septic looked at so you know what you are buying.

On low ground by the harbor, a tidal river or a salt marsh, look up the flood map. When a house falls in a FEMA special flood hazard area, flood insurance is required by the lender, and that premium adds to what you pay each month. Get a quote on the exact property while you are still deciding.

There are not many sales in small coastal towns, and fewer still that look like a shorefront cottage on a point. The appraiser may have to reach well outside town for comparable homes, which can add time. That does not stop a loan, but I plan for it in the schedule and let you know what to expect.

Some buyers find a lot with a view and want to build. A conventional one time close construction loan in Maine can finance the land and the house together with one closing. On the conventional side it is open to a primary home, a second home or an investment property; attached condos are not eligible. VA one time close only works for a home you will live in as your primary residence. If you want to buy the land now and build later, read my Maine land loans page.

If your main house is in Maine or Florida, the equity in it can help pay for a Downeast place. A Maine HELOC, a Florida HELOC or a home equity loan on that house can fund your down payment, and for a modest cottage it may cover the whole purchase. I will compare that against a mortgage on the new property so you can choose.

After you have owned the Downeast home for a while, it can be borrowed against as well. Some second mortgage programs allow combined loans up to 85% of value on a second home, usually once you have owned it six months or more. Not everyone will qualify.

Plenty of people buying in Blue Hill, Castine or Lubec live in another state, and that works fine. The property needs to be in Maine, and we can handle everything by phone, text and email. My vacation home loans page covers second homes more broadly, and if you are also looking at a lake or a camp inland, my Maine camp and lake house loans page is a good next read.

• The address or listing link
• Whether you will use it yourself, rent it some weeks, or rent it most of the year
• How you reach it: town road, private road, bridge or causeway
• What you plan to put down and where that money is coming from
• Recent pay stubs and tax returns, or for self employed buyers, a quick description of how your business pays you

From there I can tell you which loan fits and flag anything about the property that could hold up the appraisal. Or just contact me about a house you have your eye on.