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 would put down on a primary residence. Most lenders require a minimum of 10 percent, but many want 20 to 25 percent. Some specialty lenders go as low as 10 percent, while others will not touch a vacation property for less than 30 percent down. The exact amount depends on your credit score, the loan program you choose, and how the lender views vacation property risk.

The reason is straightforward: lenders see vacation homes as riskier than primary residences. If you face financial hardship, you are more likely to stop paying a mortgage on a property you visit occasionally than one where you live. That perception means the lender wants more of your own money in the deal before they commit theirs.

Cash reserves matter more for vacation homes than primary homes. Many lenders will ask to see six to twelve months of mortgage payments, property taxes, insurance, and HOA fees sitting in your bank account after closing. This is not a down payment requirement, but it affects whether a lender will approve you at all.

Key Takeaways

  • Most vacation home mortgages require 10 to 25 percent down, with 20 percent being the most common threshold where rates and terms improve.
  • Lenders typically require larger cash reserves for vacation homes—often six to twelve months of all property expenses—to prove you can carry two mortgages.
  • Your credit score, debt-to-income ratio, and the loan program (conventional, FHA, VA) all shift the down payment requirement up or down.
  • Vacation home loans cost more in interest and fees than primary residence loans, so a larger down payment saves money over the life of the mortgage.
  • Some lenders will not finance vacation properties at all, so you may need to contact portfolio lenders or credit unions that keep loans in-house.

How down payment requirements change by loan type

Conventional loans are the most common path for vacation home buyers. They typically start at 10 percent down but improve significantly at 20 percent. Below 20 percent, you pay private mortgage insurance (PMI), which adds 0.5 to 1.5 percent to your annual mortgage payment. At 20 percent down, PMI disappears. Most lenders offering vacation home mortgages require at least 10 percent, but some will not go below 15 or 20 percent.

FHA loans are rarely used for vacation homes. The Federal Housing Administration explicitly states that FHA mortgages are for primary residences only. If you own a vacation home, you cannot use an FHA loan to buy it.

VA loans follow the same rule as FHA: they are for primary residences. If you are a veteran, you cannot use your VA benefit for a vacation property.

Jumbo loans (mortgages above the conforming loan limit, which varies by county but is typically around $766,000) often require 20 to 30 percent down for vacation homes. Some jumbo lenders will not finance vacation properties at all, regardless of down payment size. If you are buying an expensive vacation home, you may need to call multiple lenders to find one willing to work with you.

What lenders actually look at beyond the down payment percentage

Your credit score matters more for a vacation home than a primary residence. Most lenders want a score of 700 or higher for a vacation property mortgage. Some will go as low as 680, but the rate will be higher. A score below 680 makes vacation home financing very difficult.

Your debt-to-income ratio (DTI) is the total of all your monthly debt payments divided by your gross monthly income. For a primary residence, most lenders allow a DTI up to 43 percent. For a vacation home, many lenders cap it at 36 percent because you are now carrying two mortgages. If you already have a primary mortgage, car loans, student loans, and credit card debt, adding a vacation home payment might push you over the limit.

Cash reserves are the money left in your accounts after you close on the vacation home. Lenders want to see that you can cover the mortgage, property taxes, insurance, and HOA fees (if applicable) for six to twelve months without touching other savings. For a $400,000 vacation home with a $320,000 mortgage at 6.5 percent interest, that could mean showing $15,000 to $30,000 in reserves after closing, depending on the lender and the property's location.

The property itself matters. A condo in a resort area is riskier to a lender than a single-family home in an established neighborhood. Condos in buildings with high vacancy rates or delinquent HOA fees can disqualify you entirely. Some lenders will not finance condos in certain developments, period.

Down payment size and what it costs you over time

A larger down payment on a vacation home saves money in two ways: lower interest rates and no PMI. A borrower putting 10 percent down might pay 0.5 to 0.75 percent more in interest rate than one putting 20 percent down. On a $320,000 mortgage, that difference is roughly $1,600 to $2,400 per year in extra interest.

PMI on a vacation home mortgage typically costs 0.5 to 1.5 percent of the loan amount annually, depending on your credit score and down payment size. On a $320,000 loan, that is $1,600 to $4,800 per year. PMI stays on the loan until you reach 20 percent equity through payments or until you refinance. For a 30-year mortgage, that could be 10 to 15 years of PMI payments.

Putting 25 percent down instead of 20 percent does not usually change your interest rate, but it does reduce the loan amount and therefore the total interest you pay. On a $400,000 purchase, the difference between 20 and 25 percent down is $20,000 in cash upfront, but it saves roughly $30,000 to $50,000 in interest over 30 years, depending on the rate.

Where to find lenders willing to finance vacation homes

Not all lenders offer vacation home mortgages. Large national banks often do, but some regional banks and credit unions do not. Start by calling your primary lender—the bank where you have your checking account or your primary mortgage—and ask directly whether they finance vacation properties and what their minimum down payment is.

Mortgage brokers can search multiple lenders at once, which saves time if you have an unusual situation (low credit score, high DTI, or a condo in a building with problems). A broker does not lend money themselves; they connect you with lenders and handle the paperwork. They are paid by the lender, not by you, so there is no additional cost to use one.

Portfolio lenders—banks that keep mortgages on their own books rather than selling them to Fannie Mae or Freddie Mac—are often more flexible on vacation homes. They can set their own rules and may accept a lower credit score or higher DTI if they believe you are a safe bet. Credit unions often act as portfolio lenders and may have better terms for members.

Jumbo lenders specialize in mortgages above the conforming limit. If your vacation home purchase is large, these lenders are worth contacting. Some have better vacation home programs than others.

Timing and what happens after you put down the down payment

Once you have agreed on a down payment amount with a lender, you will move into the underwriting phase. This is when the lender verifies your income, credit, employment, and assets. For a vacation home, underwriting typically takes 5 to 10 business days longer than a primary residence because the lender is doing extra due diligence on the property itself.

The appraisal happens during underwriting. The lender orders an appraisal to confirm the property is worth what you are paying for it. If the appraisal comes in low, you have three choices: renegotiate the price with the seller, put more money down to make up the difference, or walk away. This is why a larger down payment gives you more flexibility—if the appraisal is $20,000 short and you planned to put 25 percent down, you can absorb that gap more easily than if you were planning 10 percent.

At closing, you will bring your down payment as a wire transfer or cashier's check. The lender will also collect closing costs, which typically run 2 to 5 percent of the loan amount. For a $320,000 mortgage, closing costs might be $6,400 to $16,000. Some lenders allow you to roll closing costs into the loan, but this increases your monthly payment and the total interest you pay.

Frequently Asked Questions

Can I use a home equity line of credit on my primary home to fund the down payment on a vacation home?

Yes, but the lender will count the HELOC payment as part of your debt-to-income ratio. If your primary mortgage is $2,000 and you draw $50,000 from a HELOC at 8 percent interest, that adds roughly $400 to your monthly debt. For a vacation home lender, that $400 counts toward your DTI, which may push you over their limit. Ask the vacation home lender upfront how they treat HELOC debt.

What if I have a low credit score but a large down payment?

A larger down payment helps, but it does not override a very low credit score. Most lenders will not finance a vacation home for someone with a score below 680, even with 30 percent down. If your score is between 680 and 700, a larger down payment and strong cash reserves can improve your chances. If it is below 680, focus on raising your score first—paying down credit card balances and fixing errors on your credit report—before explore.

Do I need a down payment for a vacation home if I am paying cash?

No. If you are paying the full purchase price in cash, there is no down payment and no mortgage. You will still owe property taxes, insurance, and HOA fees, but you will not have a lender involved. Some people buy vacation homes with cash to avoid the higher rates and stricter requirements that come with vacation home mortgages.

Will the down payment requirement change if I rent out the vacation home part of the year?

Yes, it may go down. A property you rent out part of the year is classified as an investment property, not a vacation home. Investment property mortgages sometimes have lower down payment requirements (as low as 15 percent) because the rental income offsets the lender's risk. However, you will need to show a lease or proof of rental history, and the lender will count only a portion of the rental income toward your debt-to-income ratio. Talk to the lender about how they classify the property before you explore.

What happens if I cannot save the down payment the lender requires?

You have a few options: delay the purchase and save more, look for a lender with a lower minimum down payment (some will go to 10 percent), or consider buying a less expensive property. You can also ask the seller to cover some of your closing costs, which frees up cash for the down payment, though this is less common in vacation home sales than primary residence sales.