Buying a 2nd home is a big step into real estate investing because it's difficult to do in April 2015. I own 3 pieces of real estate, including one townhouse condo (left image), one garden style condo (primary home) and one residential home that I also lease. When I bought my 2nd condo it was 2006 and the real estate market was booming. I was able to get a Personal Loan and use it as a down payment, but that's not possible in 2015.
It was easy! I bought my first condo in 2005 for $205,000 with 20% down. Therefore, I had 20% equity in the home immediately. Since the economy was in good shape in 2005-2006 banks were offering 110% Home Equity Loans. So, 3 months after purchasing my first condo I went to the bank and got a Home Equity loan for $40,000.
Once I had another $40,000 in cash I started looking at condos in SC near Hilton Head Island. I found one on a golf course and purchased it with 20% down again. Remember, when buying a home and immediately renting it to a tenant, banks require 20% down payment. It's considered an "investment property" and treated with higher risk than a first home or condo.
After owning 3 condos I wanted to get into a residential home with a yard and a garage. I was told by the bank that I needed at least 5% down if I was moving into the home, along with 6 months of reserves. The reserves included the mortgage payment, taxes and condo fee of my current condo totaled over 6 months. It also includes the mortgage payment and taxes from the home I was moving into. The catch was that the "reserves" were allowed to be in a retirement account such as a 401K or IRA program. Mortgage rates are still low. Refinance & Lower Your Payment! You can't go wrong with real estate!
You can avoid the reserves if you put down at least 20%, but since I only wanted to put down 5% I was held to more restrictions. Instead of searching online go straight to a bank or mortgage lender to find out what criteria you need to meet. You situation is probably unique, just like everyone else, so talking to your local lender is the best idea.