Dreaming of an East Hampton retreat but unsure how to finance it? You are not alone. With prices that trend well above national levels and many cash buyers in the mix, a smart financing plan can make the difference between winning the home you love and watching it slip away. In this guide, you will learn loan options for second homes, local taxes and fees that change your budget, insurance factors on the coast, and the steps to get from offer to keys with confidence. Let’s dive in.
Why East Hampton financing is different
East Hampton sits in a high-cost market where recent Hamptons medians have hovered near 2.0 million and activity is strong in the 1 to 5 million range. A large share of sales close in cash, which can pressure timelines and negotiation. You can expect lenders to be exacting and to prefer clear pre-approvals for larger loan sizes. Local market reporting helps explain why preparation matters.
Many purchases exceed conforming loan limits. In 2025, the baseline conforming limit for a one-unit home is 806,500 and the high-cost ceiling is 1,209,750. Loans above the applicable limit are jumbo, which have different credit, reserve, and documentation rules. You can check the latest limits from the FHFA.
Second-home loan options
Conventional loans for second homes
Second homes can qualify for conventional financing when the loan amount is within conforming limits. Lenders often require a solid credit profile, conservative debt-to-income ratios, and documented reserves. Fannie Mae’s guide shows second homes typically need at least two months of reserves, with more required in some cases. See reserve rules in the Fannie Mae Selling Guide.
Down payments for second homes often start around 10 percent on conforming loans, though many lenders prefer 15 to 20 percent. Rates can be a bit higher than for a primary home, and underwriting is usually more conservative. Your exact terms will depend on your lender and overall profile.
Jumbo financing
Because many East Hampton homes require larger loans, jumbo financing is common. Jumbo programs are set by individual lenders, so requirements vary, but you should expect higher minimum credit scores, larger down payments for second homes, and more months of liquid reserves. Learn the basics of jumbo loans from Investopedia.
FHA and VA
FHA and VA loans are designed for primary residences. If you plan to use the home as a true second home or vacation property, these programs generally do not apply. If your occupancy plans will change, speak with your lender and attorney early.
Using equity or cash
Some buyers tap equity from a primary home through a cash-out refinance or HELOC to fund the down payment, then pair it with a conventional or jumbo loan on the East Hampton property. Your lender will evaluate your ability to carry both payments and reserves. Keep documentation clear and updated to avoid delays.
Renting vs. second-home classification
A second home allows personal use, and occasional renting may be acceptable. If the property is rented frequently or treated like a business, a lender may classify it as an investment property, which often means higher down payments, rates, and reserves. Clarify your intended use with your lender before you apply.
The real cost of closing in East Hampton
New York State charges a real estate transfer tax of 0.4 percent. There is also a 1 percent mansion tax on residential purchases of 1 million or more. These costs are typically paid at closing. Review the details at the New York State Department of Taxation.
East Hampton buyers also pay the Peconic Bay Community Preservation Fund and Community Housing Fund transfer tax. The current combined rate in East Hampton is 2.5 percent, with certain exemptions that vary by property type and price. Get the latest overview from the Peconic Land Trust, and confirm exemptions with your attorney or closing agent.
If you record a mortgage, Suffolk County collects a mortgage recording tax and associated fees. The county outlines mortgage tax components that total about 1.05 percent of the mortgage amount, plus recording and verification charges. See the Suffolk County Clerk’s mortgage tax guidance.
Here is an illustrative example for a 1.5 million purchase. You could expect the 0.4 percent state transfer tax around 6,000, the 1 percent mansion tax at 15,000, and a 2.5 percent CPF/CHF on the taxable amount after any eligible exemption. Your attorney will run precise numbers and confirm who pays each item under your contract.
Insurance, flood, and coastal factors
If the home is in a FEMA Special Flood Hazard Area and you use a mortgage, flood insurance will be required. Premiums vary based on elevation, construction, and coverage choices. You can check the flood zone and download a FIRMette at FEMA’s Flood Map Service Center.
Homeowners insurance on coastal Long Island often carries higher premiums and hurricane or windstorm deductibles. If coverage is hard to place, New York offers assistance through NYPIUA and the Coastal Market Assistance Program. Learn more from the state’s insurance resources at the Department of Financial Services.
Many parts of the East End face long-term coastal and storm risk. Lenders and insurers increasingly consider elevation and resiliency in their pricing and approvals. Build realistic insurance and maintenance budgets into your plan.
If you plan to rent seasonally
East Hampton Town operates a Rental Registry with registration, fees, and compliance requirements, and nearby villages maintain their own rules. Minimum stay periods, inspections, and advertising rules can affect your rental calendar and income potential. Review the Town’s Rental Registry and confirm village rules if your home is within a village boundary.
Because frequent short-term renting can change how a lender classifies the property, discuss your plans before you apply. Your loan type, down payment, and reserve requirements may be affected.
How to prepare your finances
- Get pre-approved with a lender that does jumbo loans and understands coastal markets. A strong pre-approval with reserves documented helps you compete in a cash-heavy market.
- Document assets and reserves. Second homes typically need at least two months of reserves, and many jumbo programs require more. See reserve guidance in the Fannie Mae Selling Guide.
- Price insurance early. Check flood zones on FEMA’s map portal and talk with an independent broker about homeowners, windstorm, and flood coverage.
- Model total closing costs. Include state transfer and mansion tax, Peconic CPF/CHF, Suffolk mortgage tax, title, lender fees, and escrows. Start with the state tax overview and your attorney’s estimate.
- Confirm rental compliance. If you plan to rent, register with the Town and review village rules using the Rental Registry.
Work with a local advisor you trust
A second home is both a lifestyle decision and a financial investment. You deserve a guide who knows the Hamptons, understands coastal lending and insurance, and can coordinate the details from offer to closing. With 25-plus years serving Long Island and active experience in the Hamptons, Irene pairs boutique attention with Douglas Elliman’s reach to help you plan, negotiate, and close with confidence.
Ready to explore second-home financing and the right property in East Hampton? Connect with Irene Siconolfi for a thoughtful, high-touch plan tailored to your goals.
FAQs
What makes financing a second home in East Hampton unique?
- High home prices and many cash buyers mean you may need jumbo financing and a strong pre-approval to compete.
Do I need flood insurance for a second home in East Hampton?
- If the property is in a FEMA Special Flood Hazard Area and you use a mortgage, flood insurance is required. Check the flood zone before you make an offer.
How much are East Hampton closing taxes on a 1.5 million home?
- As a rough framework, plan for 0.4 percent state transfer tax, a 1 percent mansion tax, and a 2.5 percent Peconic CPF/CHF on the taxable amount after any applicable exemption, plus county mortgage taxes if you finance.
What is the difference between conforming and jumbo loans here?
- Conforming loans follow 2025 limits up to 806,500 baseline or 1,209,750 in high-cost areas. Above that you are in jumbo territory with stricter credit, reserve, and down payment expectations.
Can I use FHA or VA to buy a vacation home in East Hampton?
- Generally no. These programs are designed for primary residences, so most second-home buyers use conventional or jumbo financing.
