Cabin on a lake.

Buying A Lake House: What You Need To Know And Consider

6-Minute Read
Published on January 30, 2024
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A lake house can be an investment into a lifetime of unforgettable summer vacations and weekend getaways.

Imagine watching the sunrise over a glassy lake. Long summer days out on the water. Sunset boat rides. Bonfires complemented by singing and roasted marshmallows. Bonding and memories that last long after you’ve packed up the car to go home.

Owning a lake house can be a lot of fun – and a lot of work. From finding the right house to getting a mortgage to keeping up with maintenance, you must prepare before you dive into the process.

Here’s what you need to know when you’re in the market for a lakefront vacation home or investment property.

How Much Does A Lake House Cost?

Before you start looking at houses, you need to consider whether you can afford this type of investment. It’s about more than being able to afford the mortgage. A lake home has plenty of associated costs.

Property Costs

For starters, waterfront property is generally more expensive than other types of houses, and if you’re purchasing it as a second home, there are stricter requirements for financing. Buying a second home requires a larger minimum down payment than a primary residence. Depending on the loan, you may be required to put a minimum of 10%, 15% or 20% (or more) down.

Home Insurance

You may need to pay flood insurance for your lake house on top of likely higher-than-average homeowners insurance. Even if you aren’t required to purchase flood insurance, you should seriously consider it. Even a few inches of water can cause costly damage to a home, and regular homeowners insurance typically doesn’t cover flood damage.

Maintenance

You’ll also likely have a larger maintenance budget with a lakefront property because homes near the water tend to undergo more wear and tear and include more property features that require time, money and effort, such as a dock that needs regular maintenance.

Time And Effort

There are also nonmonetary “costs” when purchasing a vacation home, especially one on a lakefront. Are you prepared to invest time and effort into maintenance or would hiring someone to take care of the house be a better idea?

Paying For The Fun Stuff

Now, we can finally explore why you’re likely considering buying a lake house in the first place! A lake house can be a ton of fun, but the activities and equipment associated with them – like boating, jet skiing, water skiing – aren’t cheap.

Make sure you know what gear you’ll be in the market for once the house is yours and how much it will cost.

What To Ask When Buying A Lake House

Before you decide on your lake house, dive into the details. Here are a few questions you should ask your real estate agent or the seller:

  • Does the property require flood insurance?
  • What are the property and waterfront rights (for example, does the dock in the backyard belong to the property owner)? Are motorized watercrafts allowed on the lake? Can residents fish?
  • What’s the quality of the lake water?
  • Is there a homeowners association (HOA) or similar governing body for the lake community? What are their bylaws?
  • How close is the nearest grocery store and gas station?
  • Do residents pay a premium for utilities (If the area is more rural or secluded)?
  • Does the property have a private septic system?
  • How is the cellphone service?

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How To Buy A Lake House

So, you’ve thought it through, considered all the financial factors and have decided to buy a lake house. Now, it’s time to get the process started. As with any sale, there are many steps to buying a home, but the process of buying a second property can differ slightly.

1. Decide How To Classify Your Lake House

First, consider how you want to classify the property. Your lake house will likely fall into one of two categories: primary residence or second home. (If you’re interested in buying a lake house to rent, check out our guide to purchasing a rental property.)

If you plan to move into your lake house and live there most of the year, that makes it your primary residence. It’s a second home if you plan to live there for part of the year and keep your primary residence.

2. Get Preapproved For A Mortgage

Whichever route you take, the first step is always the same: Get preapproved for a mortgage. A preapproval lets you shop for lake homes knowing your price range, which will help you make credible offers on properties.

If you’re purchasing the property as a second home, you may need a higher credit score to qualify for a mortgage, and the lender may charge a higher interest rate.

You may even run into a situation where you need to get a jumbo loan – which has much stricter requirements – for a property that exceeds conventional mortgage borrowing limits.

3. Find An Experienced Real Estate Agent

Purchasing a lake house differs from purchasing a standard home in many ways. That’s why you should prioritize working with someone who knows what to expect and what to look out for.

When searching for a real estate agent, look for one who specializes in lakefront properties. This is especially important if you’re new to lake living and unaware of the potential pitfalls of a lakefront home. An experienced agent will know what questions to ask about the properties you view and what you need to find out about a home before you make an offer.

4. Find The Right Lakefront Property

The right lakefront property will balance your personal preferences with location-specific factors and, of course, your budget. You’ll also need to balance your priorities as the current owner against the property's future resale value.

5. Make An Offer

You need to make an offer that catches a seller’s attention and interest. How you negotiate with the seller will depend on whether you’re buying a home in a buyer’s or seller’s market. If you end up in a bidding war or can’t afford a seller’s counteroffer, it may be a good idea to continue the search for your dream lake house.

You were likely attracted to the home’s curb appeal, but you need to know what may be lurking beneath its well-staged exterior. You can find out more about a home by reviewing the Seller’s Disclosure. However, states have different rules about what sellers must disclose. To protect yourself, learn the state’s disclosure laws and add relevant property contingencies to your purchase offer.

6. Get A Home Inspection

A home inspection is essential – no matter what type of home you’re buying – but it’s critical when considering waterfront property.

Water can do all kinds of damage to a home. You should ensure the houses you’re interested in don’t have leaking or flooding issues. An inspector can help ensure you won’t have to deal with an unexpected water intrusion or mold issue after you move in.

If the home is connected to a septic tank, you should have the tank inspected. Repairs to a septic system can be expensive and inconvenient. If an inspector finds an issue, you can ask the seller to pay for it.

7. Go Through The Closing Process

Depending on where you’re buying your lakefront home, you may be able to take advantage of different options to close on the home, which is helpful if the home isn’t near your primary residence. Check if the seller or their agent can set up a virtual walkthrough of the home before you sign the mortgage agreement and ask whether eClosing is an option.

When Is The Best Time To Buy A Lake House?

Lakefront properties are available year-round, but waiting until the right time to buy may offer more options and even save you money.

Prospective lake house buyers will see the highest number of homes for sale in spring. If your priority is finding the ideal home, spring may be the best time to buy. However, you may face more competition during this season because homes tend to sell over their asking price.

It may be financially savvy to purchase at the end of summer or fall to avoid competition and save money. At this time of year, sellers may be more motivated to sell their homes before winter hits.

The Bottom Line: Find Your Perfect Lake House Escape

While there are many factors to consider before purchasing a lake house, it can be a great investment property or vacation home, making it a worthwhile investment for many buyers.

You’ll have a new, fun getaway spot to enjoy with your family or friends – and maybe a handful of people you haven’t heard from in a while. As the saying goes: You never know how many friends you have until you have a lake house.

Are you ready to dive into lake life and buy a vacation home? Apply online for mortgage approval today.

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Get matched with a lender that will work for your financial situation.

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Andrew Dehan

Andrew Dehan is a former writer for Rocket Mortgage. He writes about real estate and homeownership. He is also a published poet, musician and nature-lover. He lives in metro Detroit with his wife, two children and dogs.