Buying a Second Home on the Cape or the Islands

A second home is bought emotionally and carried financially, and the gap between those two facts is where most of the regret lives. The property is usually lovely. It is the annual cost, the financing category and the transfer fee that people have not counted.

The financing is a category, and it constrains you

Lenders classify a purchase as a primary residence, a second home, or an investment property, and the three are priced and underwritten differently. Second-home terms sit between the other two and typically require a larger down payment than a primary residence, with reserves on top.

The part buyers miss: a second-home loan generally requires the property to be available for your own use and commonly restricts renting it out. If the plan is to let it for the season and cover the mortgage, that is closer to an investment property in the lender's eyes, and investment financing carries a bigger down payment and a higher rate again.

So say what you actually intend at the application, not afterwards. Buying on second-home terms and then running it as a seasonal let can breach the note. Massachusetts mortgage options covers the underlying loan types, and short-term rentals in Massachusetts covers the regime you would be entering.

Also know how underwriting treats the rental income you are counting on: for qualifying purposes, projected short-term rental income generally does not count. The lender wants your income to support both properties.

The land bank transfer fee

On Nantucket and Martha's Vineyard, a land bank transfer fee is customarily payable by the buyer on a real estate transfer — a percentage of the price, on top of everything else, and a real line in your cash to close. Exemptions exist, including for certain first-time buyers up to a threshold.

This surprises buyers because it is unlike the rest of Massachusetts, where the seller customarily pays the deeds excise and the buyer pays no transfer tax at all — see what a buyer pays at closing. Confirm the current rate, thresholds and exemptions with the relevant land bank commission, because they are set locally and change.

On Cape Cod the funding model is different — a surcharge through the Community Preservation Act rather than a transfer fee — so do not assume the Islands' arrangement applies across the bridge. Ask about the specific municipality.

Insurance, which is the recurring cost that has moved most

Coastal property insurance is its own subject and it is the line most likely to be underestimated.

A separate, percentage-based wind or hurricane deductible is common — calculated on the insured value rather than as a flat sum, which makes it far larger than a standard deductible.
Flood insurance is separate from your homeowner policy and is required by lenders in mapped high-risk zones. Flood risk and Boston real estate covers how zones work.
Availability varies, and some properties end up in the residual market rather than with a standard carrier.
Vacancy matters. A house empty for months has its own conditions, and an unoccupied-property clause can affect a claim.

Get a written quote for the specific address during your inspection period. Not an estimate for the town — the address, because the answer changes street by street. The home insurance guide covers the rest.

The systems, because these are rural properties

Most of what applies is already covered elsewhere and all of it applies harder here:

Septic. Title 5 governs, and inspection at transfer is the norm. Sandy soil and high water tables are common and so are constrained lots. Title 5 and septic systems.
Private wells, where there is no town water. Nantucket has required PFAS testing before transfer since 2024, and requirements vary by town. Buying a home on a private well.
Winterisation. A house closed for the season needs the water shut off and the system drained properly, or the first hard freeze is a burst pipe in an empty building.
Wetlands and coastal resource areas, which restrict what you may build or alter far more tightly than inland. Waterfront property covers Chapter 91 and the conservation side.

The honest annual cost

Write it out before you fall in love with a house, not after:

1.Mortgage principal and interest.
2.Property tax — and check whether the town has a residential exemption, because a second home does not qualify for one. How property tax works here.
3.Insurance, including wind and flood.
4.Utilities year-round, including heat kept above freezing all winter for an empty house.
5.Septic pumping, well testing, and maintenance nobody is on site to notice.
6.Landscaping, opening and closing, and someone to check on it.
7.Any association or road maintenance fee — see private roads and shared driveways.
8.Furnishing and replacing.

Then, if letting is part of the plan, subtract the costs of that — management, cleaning, linens, platform fees, the excise the guest pays on top of your rate — and be honest about how many weeks the season actually is.

The questions to answer before you offer

How many weeks a year will you genuinely be there? The honest number is usually lower than the planned one.
Is the drive one you will still make in five years?
Can you carry it in a year with no rental income at all?
What is the resale market for that specific property type in that town, in the off season?

That last question deserves more weight than it gets. Seasonal markets are thinner, and a property listed in November is looking at a much smaller field than the same property in May. Whatever your plan, assume the exit takes longer than a suburban sale would.