Vacation home mortgages typically require 10 to 25 percent down, depending on the lender and loan type
A vacation home down payment is almost always larger than what you'd put down on a primary residence. Most lenders require a minimum of 10 percent, but many won't go below 20 percent. Some require 25 percent or more. The exact amount depends on your credit score, the loan program, how much cash you have available, and whether you're buying the property as a rental investment or purely for personal use.
The reason for the higher requirement is straightforward: lenders see vacation homes as riskier than primary residences. You're not living there full-time, so if you hit financial trouble, you're more likely to walk away from a vacation property than from your main home. That risk gets passed to you in the form of a larger down payment.
The down payment you make affects your interest rate, your monthly payment, and whether you'll pay private mortgage insurance (PMI). Put down less than 20 percent and you'll almost certainly pay PMI on top of your mortgage, property taxes, and insurance—costs that add up quickly on a second property.
Key Takeaways
- Vacation home down payments start at 10 percent but commonly run 20 to 25 percent, higher than primary residence requirements.
- Putting down less than 20 percent triggers PMI, which increases your monthly cost and doesn't build equity in the home.
- Your credit score, debt-to-income ratio, and cash reserves all affect both the minimum down payment a lender will accept and the interest rate you receive.
- Some loan programs (like portfolio loans from smaller banks) may allow lower down payments but charge higher interest rates to offset the risk.
- The down payment amount you choose directly impacts affordability—a 10 percent down payment on a $400,000 vacation home is $40,000, while 25 percent is $100,000.
How down payment requirements differ by loan type
Conventional loans (the most common type) typically require 10 to 20 percent down for a vacation home. FHA loans, which are designed for primary residences, are not available for vacation properties. VA loans (for military borrowers) also don't cover vacation homes. That eliminates two of the most flexible loan programs.
Jumbo loans—mortgages above the conforming loan limit (which varies by county but is usually around $766,000 in 2024)—often require 20 to 30 percent down. If you're buying an expensive vacation property, expect to put down more cash than you would for a standard conventional loan.
Portfolio loans, offered by some smaller banks and credit unions, may allow 10 to 15 percent down but typically charge 0.5 to 1.5 percent higher interest rates. You're trading a smaller down payment for a higher monthly cost over the life of the loan. The bank keeps the loan on its own books rather than selling it to investors, which gives them more flexibility—but they charge for that flexibility.
What lenders look at when setting your down payment
Your credit score is the first filter. A score of 740 or higher usually qualifies you for the lowest down payment a lender will offer (often 10 to 15 percent). A score between 700 and 739 may require 15 to 20 percent. Below 700, many lenders won't touch a vacation home mortgage at all, or they'll demand 25 percent or more.
Your debt-to-income ratio (DTI) is the second major factor. This is the percentage of your gross monthly income that goes to debt payments—mortgage, car loans, credit cards, student loans, everything. Most lenders cap DTI at 43 to 50 percent for a vacation home. If you're already carrying significant debt, the lender may require a larger down payment to bring your total housing costs (and thus your DTI) into range.
Your cash reserves matter too. Lenders want to see that you have savings left over after closing. If you're putting down 10 percent and depleting your entire bank account, a lender may ask for 20 percent instead. They want proof that you can handle a repair, a property tax increase, or a gap in rental income if you're renting the place out.
The property itself affects the requirement as well. A condo in a resort area with strong resale demand may may have access to for a lower down payment than a remote cabin. Condos in buildings with HOA problems or high delinquency rates often require 20 to 25 percent down. Lenders pull property data and appraisals to assess how easily they could sell the place if they had to foreclose.
Down payment versus PMI: the math that matters
If you put down less than 20 percent, you pay PMI. On a $400,000 vacation home with 10 percent down ($40,000), PMI might run $200 to $300 per month, depending on your credit score and the loan amount. Over 30 years, that's $72,000 to $108,000 in PMI alone—money that doesn't reduce what you owe.
A 20 percent down payment ($80,000 on that same $400,000 home) eliminates PMI entirely. Your monthly payment is lower, and every dollar you pay goes toward principal or interest, not insurance. The difference in total cost over the life of the loan can easily exceed $50,000.
This is why many buyers stretch to reach 20 percent down on a vacation home, even if a lender would accept 10 or 15 percent. The monthly savings and the elimination of PMI make the larger upfront payment worth it over time.
How to calculate what you need to save
Start with the purchase price of the property you're considering. Multiply it by the down payment percentage you're targeting (10, 15, 20, or 25 percent). That's your down payment amount.
Then add closing costs, which typically run 2 to 5 percent of the purchase price. These include the appraisal, title search, title insurance, attorney fees, recording fees, and lender fees. On a $400,000 vacation home, closing costs might be $8,000 to $20,000.
Add those two numbers together. That's the cash you need to bring to closing. Many buyers also set aside an additional 1 to 2 percent of the purchase price for immediate repairs or updates, so budget for that too if the property needs work.
| Purchase Price | 10% Down | 15% Down | 20% Down | 25% Down |
|---|---|---|---|---|
| $300,000 | $30,000 | $45,000 | $60,000 | $75,000 |
| $400,000 | $40,000 | $60,000 | $80,000 | $100,000 |
| $500,000 | $50,000 | $75,000 | $100,000 | $125,000 |
| $600,000 | $60,000 | $90,000 | $120,000 | $150,000 |
Down payment sources and what lenders accept
Lenders require documentation for where your down payment comes from. Savings accounts, money market accounts, and CDs are straightforward—provide bank statements from the past two months. Retirement accounts (401k, IRA) can sometimes be tapped, but rules vary by account type and lender. A 401k loan is often cheaper than a personal loan, but you're borrowing against your own retirement.
Gifts from family members are allowed by most lenders, but you'll need a signed gift letter stating that the money is a gift, not a loan you have to repay. The lender wants to know your actual debt obligations. If a family member gives you $50,000 but you're expected to pay it back, that's debt, and it affects your DTI.
Selling stocks, bonds, or other investments is fine, but lenders will ask for statements showing the sale. If you're selling at a loss or if the timing looks suspicious (like you just sold everything right before applying), the lender may ask questions or require a letter of explanation.
Down payment assistance programs for vacation homes are extremely rare. Most programs target first-time homebuyers or primary residence purchases. Employer programs sometimes offer down payment help, so check with your HR department, but don't count on it for a second property.
Frequently Asked Questions
Can I put down less than 10 percent on a vacation home?
Very few lenders will go below 10 percent, and those that do charge significantly higher interest rates and require excellent credit (750+). Portfolio lenders are your best bet, but you'll pay for the flexibility. Most buyers find that the higher interest rate makes a smaller down payment more expensive over time than saving up for 10 to 15 percent.
Does it matter if I'm renting the vacation home out versus using it personally?
Yes. A vacation home you rent out (investment property) usually requires a larger down payment—often 20 to 25 percent—than one you use personally. Lenders see rental income as less stable than your primary job income, so they want more of your own money at risk. You'll also need to show a lease or rental history to prove the income.
What happens if I put down 15 percent instead of 20 percent?
You'll pay PMI, which typically costs 0.5 to 1.5 percent of the loan amount annually. On a $360,000 loan (15 percent down on a $400,000 home), that's roughly $1,800 to $5,400 per year. You can sometimes remove PMI once you've paid the loan down to 80 percent of the home's value, but that takes years.
Can I use a home equity line of credit from my primary home to fund the down payment?
Yes, many lenders allow it. You'll need to show the HELOC documentation and proof that you have available credit. The lender will factor the HELOC payment into your debt-to-income ratio, so it may affect how much you can borrow for the vacation home mortgage. Ask your lender upfront whether they allow this before you open a HELOC.
What if my credit score is below 700?
Most conventional lenders won't touch a vacation home mortgage with a credit score below 700. Your options are limited to portfolio lenders (if any in your area will work with you) or waiting to build your credit. Paying down existing debt and fixing any errors on your credit report can raise your score in three to six months.