A secondary residence is a property that a borrower occupies in addition to his/her principal residence.

Secondary residences are only permitted when

• the appropriate HOC agrees that an undue hardship exists, meaning that affordable rental housing that meets the needs of the family is not available for lease in the area or within reasonable commuting distance of work, and
• the maximum loan amount is 85 percent of the lesser of the appraised value or sales price.

Note: DE lenders are not authorized to grant hardship exceptions. Only the HOC may make the determination that an undue hardship exists.

Any request for a hardship exception must be submitted, in writing, by the lender to the appropriate HOC.

Reference: For information on HOC jurisdictions, see HUD 4155.1 8.1.

A borrower may have only one secondary residence at any time.

Secondary residences must meet all of the following requirements:

• the secondary residence must not be a vacation home or be otherwise used primarily for recreational purposes
• the borrower must obtain the secondary residence because of seasonal employment, employment relocation, or other circumstances not related to recreational use of the residence, and
• there must be a demonstrated lack of affordable rental housing meeting the needs of the borrower in the area or within a reasonable commuting distance of the borrower's employment, and the borrower must provide supporting documentation of this, including
• a satisfactory explanation by the borrower of the need for a secondary residence and the lack of available rental housing, and
• written evidence from local real estate professionals who verify a lack of acceptable housing in the area.