Second homes typically require 10 to 25 percent down, depending on the loan type and lender — higher than primary residences because lenders see them as riskier.
A second home is any residential property you own that is not your primary residence. It can be a vacation house, a cabin, or a property in another state where you spend time but do not live full-time. Because you are not living there year-round, lenders treat the loan differently than they do a primary mortgage.
The down payment floor is usually 10 percent for conventional loans, but many lenders require 15 to 20 percent. If you put down less than 20 percent, you will pay private mortgage insurance (PMI), which protects the lender if you default. That insurance costs between 0.5 and 1.5 percent of the loan amount per year, added to your monthly payment. Some lenders will not offer loans on second homes at all, so your options narrow compared to primary residence financing.
The exact amount depends on three things: your credit score, the loan program, and the property itself. A strong credit score (740 or higher) and substantial savings can get you approved with 10 percent down. Weaker credit or limited reserves may require 25 percent or more.
Key Takeaways
- Conventional loans for second homes require a minimum of 10 percent down, but 15 to 20 percent is more common and avoids mortgage insurance.
- Putting down less than 20 percent triggers private mortgage insurance, which adds 0.5 to 1.5 percent of the loan amount to your yearly costs.
- Lenders verify that you have enough cash reserves after closing — typically three to six months of mortgage payments — which reduces how much you can borrow.
- FHA and VA loans do not cover second homes, so your options are limited to conventional loans, portfolio loans, or jumbo programs.
- The interest rate on a second home mortgage is usually 0.25 to 0.75 percent higher than a primary residence rate for the same credit profile.
How down payment size affects your monthly cost
The larger your down payment, the smaller your loan and the lower your monthly payment. But the relationship is not one-to-one because of mortgage insurance and interest rates.
If you buy a $300,000 second home with 10 percent down ($30,000), you borrow $270,000. At a 7 percent interest rate with a 30-year term, your principal and interest payment is roughly $1,797 per month. Add PMI of about $338 per month (1.5 percent of the loan annually), and your total is $2,135. If you put down 20 percent ($60,000), you borrow $240,000, your principal and interest drops to $1,597, and you eliminate PMI entirely — a difference of $538 per month.
That $30,000 difference in down payment saves you roughly $6,456 per year in payments. Over 10 years, that is $64,560. However, you also need to consider what that $30,000 could earn if invested elsewhere, and whether you have other debts or financial goals competing for that cash.
Cash reserves and debt-to-income limits
Lenders do not just look at your down payment. They also require cash reserves — money left in your bank account after closing. For a second home, most lenders want to see three to six months of mortgage payments sitting in savings or investments. Some require up to 12 months.
If your monthly payment (including taxes, insurance, and HOA fees) is $2,500, a lender requiring six months of reserves wants to see $15,000 in liquid assets after you close. This is separate from your down payment. If you have $50,000 saved and need $30,000 for the down payment and $15,000 for reserves, you have only $5,000 left — which may not be enough for closing costs, inspections, and appraisals.
Lenders also cap your debt-to-income ratio (DTI) — the percentage of your gross monthly income that goes to all debt payments. For a second home, the limit is usually 36 to 43 percent, compared to 43 to 50 percent for a primary residence. If you earn $6,000 per month and already have a car payment, student loans, and a primary mortgage totaling $2,000, adding a $2,500 second home payment would push you to 75 percent DTI, and you would be denied.
Loan types and their down payment rules
Not all mortgages work the same way for second homes. Here is what each type requires:
| Loan Type | Minimum Down Payment | Notes |
|---|---|---|
| Conventional (Fannie Mae/Freddie Mac) | 10–20% | Most common. Requires PMI below 20%. Interest rate 0.25–0.75% higher than primary residence. |
| Jumbo Loan | 10–25% | For loans above $766,550 (2024 limit). Stricter underwriting. Often requires 20% down. |
| Portfolio Loan | 15–30% | Held by the lender, not sold. More flexible but fewer lenders offer them. Higher rates. |
| FHA Loan | Not available | FHA only covers primary residences and investment properties, not second homes. |
| VA Loan | Not available | VA loans are for primary residences only. |
Conventional loans are the most accessible. Jumbo loans (for properties over the conforming loan limit) usually require 15 to 25 percent down and have stricter income and asset requirements. Portfolio loans are held by smaller banks and credit unions and offer flexibility but at higher rates and with fewer lenders willing to offer them.
What closing costs add to your total cash need
Your down payment is not the only cash you need at closing. Closing costs typically run 2 to 5 percent of the purchase price and include the appraisal, title search, title insurance, lender fees, and attorney fees (if required by your state).
On a $300,000 second home, closing costs could be $6,000 to $15,000. Add a 10 percent down payment ($30,000) and six months of reserves ($15,000), and you need $51,000 to $60,000 in total cash. Many buyers do not account for this and run short at closing, which forces them to reduce the down payment or walk away from the deal.
Some lenders allow you to roll closing costs into the loan, but this increases your loan amount and your monthly payment. It also means you are paying interest on those fees over 30 years. A $10,000 closing cost rolled into the loan at 7 percent costs roughly $23,500 in total interest.
Interest rates and how they differ from primary residences
Second home mortgages carry higher interest rates than primary residence mortgages, even with the same credit score and down payment. The difference is usually 0.25 to 0.75 percent, but it can be wider if you have limited reserves or a lower credit score.
If a primary residence rate is 6.5 percent, a second home rate might be 7.0 or 7.25 percent. On a $240,000 loan over 30 years, that 0.5 percent difference adds roughly $60 per month to your payment — or $21,600 over the life of the loan.
The rate difference exists because lenders see second homes as higher risk. You live elsewhere, so you are less likely to prioritize the payment if money is tight. The property is often in a different market, which makes it harder for the lender to sell if you default. Some lenders also charge an additional fee (called a second home adjustment) of 0.25 to 0.5 percent, which you may be able to negotiate down if you have strong finances.
Strategies to lower your down payment requirement
If you cannot put down 20 percent, you have a few options. The first is to accept PMI and put down 10 to 15 percent. Calculate how long you will own the property — if you plan to sell in five years, the total cost of PMI might be acceptable. If you plan to keep it 30 years, PMI becomes very expensive.
The second option is to look for a lender that offers lender-paid mortgage insurance (LPMI). Instead of you paying PMI monthly, the lender builds the cost into your interest rate. You pay a higher rate for the life of the loan, but you avoid a separate PMI payment. This works if you plan to refinance in a few years or if the rate difference is smaller than the PMI cost.
The third option is to delay the purchase and save more. If you can reach 15 or 20 percent down, you reduce both PMI costs and the interest rate premium. Saving an extra $15,000 to $30,000 over one or two years often pays for itself through lower monthly payments.
A fourth option is to buy the property as an investment rental instead of a second home. Investment property loans sometimes have lower down payment requirements (10 to 15 percent) and different rate structures, though they come with different tax and insurance rules. Consult a tax professional before choosing this route.
Frequently Asked Questions
Can I use a home equity line of credit from my primary home to fund the down payment on a second home?
Yes, many lenders allow it. However, the HELOC balance counts as debt on your debt-to-income ratio, which may reduce how much you can borrow for the second home. Also, if you default on the second home mortgage, the lender cannot take your primary home — only the second home — so this does not reduce the lender's risk.
Do I need a larger down payment if the second home is in a different state?
Not necessarily, but some lenders charge higher rates or require larger down payments for out-of-state properties because they are unfamiliar with the local market. Shop around — some national lenders have no issue with out-of-state second homes.
What if I buy a second home with cash and then take out a mortgage against it later?
You can refinance a cash-purchased second home just like any other property. The down payment requirement does not apply because you already own it outright. However, the interest rate and terms will still reflect that it is a second home, not a primary residence.
Does the down payment requirement change if the second home is a condo or townhouse?
Yes, sometimes. Condos and townhouses in buildings with high vacancy rates or poor financial reserves may require 15 to 25 percent down, even if a single-family home would require only 10 percent. The lender reviews the building's reserve fund and owner-occupancy rate before deciding.
Can I put down less than 10 percent on a second home?
Very rarely. Most lenders will not go below 10 percent for a second home. Some portfolio lenders or credit unions might offer 5 percent down, but the rate will be significantly higher and the PMI cost will be steep. It is usually not worth the trade-off.