Buying a second home is a big upgrade, whether you're laying claim to your favorite vacation spot or taking a first step into real estate investment.

But the costs involved with purchasing and maintaining a second home add up fast, and vary considerably depending on how you use the property. Mortgage options will also be based on your plans for using your second home. Here's how to make sure you're ready.

Reasons to buy a second home

There are plenty of scenarios in which a second home makes sense:

• You want a vacation home, simply as a regular getaway or as a spot where you'll eventually retire.

• You need a commuter home, because you or your partner work far enough from your primary home to make a daily drive or train trip untenable.

• You want to invest in real estate by buying a second home that you'll either rent out or flip.

• You're looking to upgrade by moving into a new house but keeping your current home as a rental.

• You're buying a home for a family member, perhaps to keep your parents close by or to give your college student a campus-adjacent pad.

It's important to be clear about your plans because the way you use your second home affects your financing options and ongoing costs, not to mention the location and type of home.

If you want a commuter home or housing for your college student, buying a condo might make more sense than a detached single-family home. A rental house or a flip will need to appeal to tenants or buyers in order to be a sound investment. A vacation home that doubles as a short-term rental may be difficult to manage on your own if you don't live near the destination.

How to buy a second home

Buying a second home includes many of the same steps you’ll remember from purchasing your current home. But the costs associated with a second home go well beyond another monthly payment. The mortgages you can use to buy a second home, and their qualification requirements, are different, too.

Consider all the costs of buying a second home

Amounts will vary depending on how you're using the second home, but here are some of the costs you may want to incorporate into your monthly budget.

• Insurance: Homeowners insurance on a second home generally costs more than on a primary residence. You may also need a different type of insurance depending on whether the second home is typically occupied and, if you're renting the home, whether it's a short- or long-term rental.

• Utilities: If the home is a rental, the tenant may pay for utilities (as long as you have a tenant). But if it’s unoccupied for long periods of time, you'll need to strike a balance between the energy use that’s necessary to keep the house livable, and what will keep you from having outsized monthly bills. You may also want to invest in a security system.

• Maintenance: This can include major seasonal maintenance as well as basic upkeep — even if no one's living in the home, your neighbors will appreciate a neatly mowed lawn. A property manager can be a big help here, but can take a big bite out of your bottom line.

• Vacancy: Planning to rent the second home? Be sure you can cover costs if you don't get tenants right away or if your short-term rental has an unexpected dry spell.

• Travel: If you've bought a vacation home that's far from your current home, don't forget to budget for trips between the two properties.

Think about the big picture, too. Have you already met your other financial goals, like saving for retirement or paying off high-interest debt? If not, will the cost of owning a second home prevent you from achieving them?