Camden, Belfast and Rockland real estate: financing a Midcoast Maine second home

The Midcoast stretches a long way, and the towns people ask me about fall into a few areas. On the west side of Penobscot Bay, Camden has the harbor village with Mount Battie and Camden Hills State Park rising behind it, and Rockport next door is smaller and quieter. Rockland is the working city of the group and the county seat, with a busy harbor and the state ferry out to Vinalhaven and North Haven. Farther up the bay, Belfast sits where the Passagassawakeag River meets the water, and a lot of the houses in and around its downtown are well over a century old.

Down in Lincoln County the shape of the coast changes. Damariscotta and Newcastle face each other across the Damariscotta River, which is known for its oyster farms. Bristol covers most of the Pemaquid peninsula, including New Harbor, Round Pond and the area around Pemaquid Point Light. Boothbay Harbor is the main village on the Boothbay peninsula, and Southport is an island town just past it, reached by a small swing bridge. Wiscasset, on the Sheepscot River where Route 1 crosses, has many older captains' houses close to the village.

If you are browsing Camden Maine real estate or Midcoast Maine homes for sale in any of these towns, the loan questions tend to be the same ones, and the rest of this page goes through them. For a broader look at every kind of loan I arrange in the region, including bridge loans and DSCR rentals, see my Midcoast Maine mortgage page.

I'm Travis Penny, a Maine and Florida mortgage broker, and I'm not tied to one bank. I compare multiple lenders for your loan and then stay with it myself, start to finish. I started in 2004 and I'm still here.

The first thing I ask is how you plan to use the place, since that decides which loan you get. A second home is a one unit property that you and your family actually use for part of the year. Renting it out for some weeks while you are away is usually fine. What a lender won't accept on a second home loan is an arrangement where a management company or rental pool decides when you can be there.

On a second home loan, the rent you hope to collect generally isn't counted when you qualify, so your own income has to carry it. If the real plan is to rent the cottage all summer and let that income pay for it, I would set it up as an investment property instead. That means a larger down payment, but rental income can count under the program rules. DSCR loans are one option for that, and they are for investment property only, available in 38 states. My DSCR investor loans page explains how they work. Several Midcoast towns have their own short term rental rules, so it is worth checking with the town before you count on that income.

A lot of what sells on the Midcoast is old. Old farmhouses with attached barns are common inland, and near the shore you find shingled cottages that were built for summer and added onto over the years. None of that is a problem in itself. What the appraiser and the lender want is a sound house that someone could live in all year, with heat, a road to get there, and water and septic systems that work.

Seasonal cottages are where the trouble shows up most often. If a place has no heat, gets its water from a line that is shut off in the fall, or sits at the end of a road nobody plows, it can be hard to finance with a regular loan. I would much rather know that early than after you have paid for an appraisal and an inspection.

Many houses near the water are on private roads or shared driveways. The lender will want to know how the road is maintained and who pays for it, so if the listing mentions a road association, ask for the paperwork. Most homes out here also have a private well and septic, and those deserve a real inspection on an older house.

Flood zones matter right on the harbor and along the rivers. If the home is in a FEMA special flood hazard area, the lender will require flood insurance, and that premium becomes part of your monthly cost. I suggest getting a quote on the exact address before your offer is firm.

Island homes on places like Vinalhaven or North Haven come with their own wrinkle. Many were built for summer, and there are fewer recent sales nearby for the appraiser to compare against. They can still work, but I want to see the property details before you get attached to one.

Condos are less common here than on the southern coast, though you will find some in the harbor towns and around Boothbay. With a condo the lender reviews the association as well as your unit, including its reserves, its budget, how many owners are behind on dues and whether there is any litigation. A project that doesn't meet the standard rules is called non warrantable, and the lenders I work with have widened what they will take there. My non warrantable condo loans page has more on that, and I like to have the association name and questionnaire before your offer is final.

If you find land instead of a house, a conventional one time close construction loan in Maine can cover the lot and the build in a single closing. On the conventional side it works for a primary home, a second home or an investment property, but it isn't available for attached condos. VA one time close is for a primary home only. My Maine land loans page covers buying the lot on its own first.

Plenty of my second home buyers use equity from the house they live in now. If your main home is in Maine or Florida, a Maine HELOC, a Florida HELOC or a home equity loan can cover the down payment on a Midcoast place, or even the whole price of a smaller cottage. I'll put that side by side with a mortgage on the new place so you can see which makes more sense.

Once you own the Midcoast house, you can borrow against it too. Some second mortgage programs go up to 85% of the home's value in combined loans on a second home, usually after you have owned it at least six months. Not everyone will qualify.

A large share of Midcoast buyers live in Massachusetts, Connecticut, New York or even farther away, and that is no obstacle. The house has to be in Maine, and I handle the whole loan by phone, text and email. You can learn more about second homes in general on my vacation home loans page.

• The listing or the address, and the association name if it is a condo
• How you plan to use it, including any weeks you expect to rent it
• Roughly how much you have for a down payment and where it is coming from
• Your recent income documents, or if you are self employed, a sense of how you are paid

With that in hand I can tell you which loan fits and what the house will need to get through the appraisal. You can also contact me and we can talk about a specific listing.