Vacation home loans 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 ask for 20 to 25 percent. Some specialty lenders go as high as 30 percent. The exact amount depends on your credit score, the loan program you choose, how often you plan to use the property, and whether you intend to rent it out.

The reason for the higher down payment is straightforward: lenders see vacation homes as riskier than primary residences. You're not living there full-time, so the property is less of a priority if money gets tight. If you stop paying, the lender knows you have another home to live in—you won't face homelessness. That changes the risk calculation, and lenders price that risk into the down payment requirement.

The down payment also affects your interest rate. A larger down payment typically means a lower rate, sometimes by half a percentage point or more. Over a 30-year loan, that difference adds up significantly.

Key Takeaways

  • Vacation home down payments start at 10 percent but commonly run 20 to 25 percent, higher than primary residence loans.
  • Your credit score, the loan type, and whether you'll rent out the property all affect the exact down payment required.
  • Putting down more than the minimum usually lowers your interest rate and reduces the total cost of the loan.
  • Jumbo loans (over $766,550 in most areas) often require 20 to 30 percent down and have stricter cash reserve requirements.
  • Some lenders require proof that you have enough liquid savings left after the down payment to cover several months of mortgage payments.

How credit score and loan type affect your down payment

A credit score above 740 usually qualifies you for the minimum down payment the lender offers—often 10 to 15 percent. Scores between 700 and 739 typically require 15 to 20 percent down. Below 700, expect 20 to 30 percent or rejection outright.

The loan program matters as much as your score. Conventional loans (not backed by a government agency) usually require 15 to 25 percent down for vacation homes. FHA loans technically allow 3.5 percent down, but FHA does not cover vacation homes—only primary residences. VA loans (for military borrowers) also exclude vacation properties. USDA loans are limited to rural properties and primary residences.

Jumbo loans—mortgages larger than the conforming loan limit, which is $766,550 in most areas—almost always require 20 to 30 percent down. Jumbo lenders are more conservative because they can't sell the loan to Fannie Mae or Freddie Mac. They hold the risk themselves, so they demand a bigger cushion.

Rental income and cash reserves change the calculation

If you plan to rent out the vacation home part of the year, some lenders will count the rental income toward your ability to pay the mortgage. This can lower the down payment requirement slightly—sometimes by 5 percent. However, the lender will typically use only 75 percent of the projected rental income, not the full amount, because they assume vacancy and maintenance costs.

Lenders also look at your cash reserves—money left in savings after you make the down payment and pay closing costs. For a vacation home, many lenders require you to have 6 to 12 months of mortgage payments in liquid savings (checking, savings, money market accounts). Some jumbo lenders require up to 24 months. If you don't have enough reserves, you may need to put down more cash to offset that gap.

A few lenders will waive or reduce reserve requirements if you put down 30 percent or more, since the larger down payment already reduces their risk significantly.

What happens if you put down less than the minimum

Most lenders will not approve a vacation home loan with less than 10 percent down. If you have less saved, you have a few options: wait and save more, look for a co-borrower with stronger finances, or explore portfolio lenders (banks that keep loans on their own books rather than selling them). Portfolio lenders sometimes have more flexible rules, but they typically charge higher interest rates to compensate.

Another route is to buy the property as an investment property rather than a vacation home. Investment property loans sometimes allow 15 percent down instead of 20 to 25 percent, though the interest rate will be higher than a vacation home rate. The trade-off is worth calculating with a lender before you decide.

Down payment timing and closing costs

Your down payment is due at closing, along with closing costs (typically 2 to 5 percent of the purchase price). These are separate from the down payment. If you're buying a $400,000 vacation home with 20 percent down, you'll need $80,000 for the down payment plus another $8,000 to $20,000 for closing costs. Plan for the total, not just the down payment.

Some lenders allow you to roll closing costs into the loan, which means you borrow the money instead of paying it upfront. This reduces the cash you need at closing but increases the total amount you owe and the interest you pay over time. Weigh this against your savings and how much you can afford to borrow.

How down payment size affects your monthly payment and total cost

A larger down payment directly lowers your monthly mortgage payment because you're borrowing less. On a $400,000 vacation home at 7 percent interest over 30 years, the difference between 10 percent and 25 percent down is roughly $240 per month. Over 30 years, that's nearly $86,000 in payments you avoid.

The interest rate also drops with a larger down payment. Putting 25 percent down instead of 15 percent might lower your rate by 0.5 percent. On a $360,000 loan (after 10 percent down on a $400,000 home), that 0.5 percent difference saves about $60,000 in interest over 30 years.

Use a mortgage calculator to compare scenarios: 10 percent down at a higher rate versus 25 percent down at a lower rate. The total cost of borrowing—principal plus interest—often favors the larger down payment, even if it takes longer to save.

Frequently Asked Questions

Can I use a gift for the down payment on a vacation home?

Yes, most lenders allow down payment gifts from family members. You'll need a gift letter stating the money is a gift, not a loan, and the donor's bank statement showing the funds were transferred. Some lenders limit gifts to a percentage of the down payment (often 20 percent), so you may still need to contribute some of your own money.

What if the vacation home is in a different state?

State location doesn't change the down payment requirement itself, but it can affect interest rates and available loan programs. Some lenders specialize in certain regions or property types. Get quotes from multiple lenders because rates and terms vary by location and property characteristics.

Do I need a larger down payment if I already have a mortgage on my primary home?

Yes, usually. Lenders calculate your debt-to-income ratio using all your debts, including your primary mortgage. A higher existing debt load means you can borrow less for the vacation home, which often forces a larger down payment to keep the loan amount manageable.

What's the difference between a vacation home and an investment property down payment?

Vacation homes (where you stay personally) typically require 15 to 25 percent down. Investment properties (where you rent to tenants year-round) sometimes allow 15 to 20 percent down but charge higher interest rates. The classification depends on how many days per year you occupy the property—usually 14 days or 10 percent of rental days makes it a vacation home.

Can I put down less if I pay for mortgage insurance?

No. Mortgage insurance (PMI) is not available for vacation homes. It's only available for primary residences with less than 20 percent down. For vacation homes, you must put down the lender's minimum, which is typically 10 to 25 percent.