Traditionally, your first home purchase culminates a period of scrimping and saving while living in an apartment or other rental unit. Once you've found the right property, you can rejoice that your monthly payments are building up equity in a home of your own instead of going to a landlord.

Once you've owned a home for some time, you may consider buying a second residence if your finances are in good shape. This place can be a destination for family vacations or provide you some extra income through short- or long-term rentals.

Some people choose to flip this timeline on its head. Instead of making their first purchase a home they want for their primary residence, they'll buy a home to serve as a vacation or rental property while continuing to rent their current home.

How you plan to use the property can affect the financing for the purchase. The legal site Nolo says loans to buy an investment property, such as a home you plan to fix up and resell or rent out to tenants to generate income, typically necessitate a larger down payment and have a higher interest rate. A loan for a property purchased as a second home, such as a vacation property, usually has a lower interest rate and may stipulate that the home can't be the borrower's primary residence and won't be rented out.

Some borrowers will want to spend some time at a residence but rent it out when they aren't using it. This arrangement will likely require an investment property loan, since you'll be collecting some income from the home during the year.

Purchasing a second home while renting your primary residence can give you a nice place to get away for a weekend or vacation without compromising some of the benefits of renting, such as more flexibility in relocating. Scott DeSimon, writing for Realtor.com, says renting can make more sense if you live in an area where it will be difficult to afford buying a home. He notes how he and his wife opted not to buy a primary residence in their expensive Brooklyn neighborhood, but instead bought a farmhouse in the Catskills as their first home purchase.

Even if you only plan on using the property yourself instead of renting it out, it can still prove to be a wise purchase. Aside from the enjoyment the home can offer, it will likely appreciate in value over time; combined with the equity you build up through regular payments, this can result in a considerable profit when you sell.

However, you don't want to put yourself in a financial crunch. Jean Chatzky, writing for the financial site The Balance, says you should be able to afford the cost of paying both rent and a mortgage on the second home.

Ideally, the value of the property should exceed its costs. Be aware that these expenses can quickly add up if the home is far enough away that you can't easily get there. DeSimon says you may need to pay for regular maintenance, such as mowing the lawn and removing snow. It also helps to know a neighbor or another person who can periodically check in on the property for roof leaks or other issues that need to be addressed before they can cause serious damage.

Determining the affordability of the home should go beyond the monthly mortgage and utility costs. Chatzky says you should check the age of the home systems and appliances to see when they might need to be replaced, and have 1 percent of the home's value saved up as an emergency reserve to meet these expenses.

Certain circumstances can make an investment or second home purchase more feasible. Thierry Godard, writing for the financial site SmartAsset, says it can be a particularly wise choice for young buyers. This group may have more time and flexibility to fix up a home, or be better able to cut costs compared to those who are raising a family, supporting an aging parent, or otherwise have costlier obligations.

If you're prepared for the responsibilities of being a landlord, renting out the property can help provide income and offset the costs of owning the home. Jaymi Naciri, writing for Realty Times, says many investors follow the rule of charging a monthly rent equal to at least one percent of the home's purchase price. You can also offer the home for short-term rentals through services like Airbnb and VRBO.

Make sure you understand the rules and expectations involved in the purchase. DeSimon says a lender may assume that the home will be your primary residence since you don't have an existing mortgage; however, you should let the lender know if you only intend to live there part of the year, since wrongfully claiming a property as a primary residence can cause trouble down the road. Chatzky says your rental income is taxable if you rent the property for more than 14 days out of the year, so be sure to keep detailed records if you intend to rent it for a longer period of time.

If you opt for an investment property rather than a second home as your first purchase, you can realize benefits beyond the passive rental income. Rent payments often aren't included on your credit report, but mortgage payments will help boost your credit score. Naciri says there are certain tax benefits you can claim as well, such as expenses related to the property and tax-deductible interest on the mortgage.

Buyers also have the option of combining an investment purchase with the purchase of their primary residence. One possibility is to rent out a property for some time and move in yourself when you're ready. Another is to buy a duplex or other multifamily residence, living in one unit and collecting income from tenants living in other units.