Vacation home loans typically require 10 to 25 percent down, depending on the lender and loan type — significantly more than primary residence mortgages
A vacation home is treated as a second property by lenders, which means the down payment floor is higher and the terms are stricter than what you would see on a primary residence. Most conventional lenders require a minimum of 10 percent down, but many will not go lower than 15 or 20 percent. Some specialty lenders and portfolio lenders (banks that keep loans on their own books rather than selling them) may go as low as 10 percent, but you will pay a higher interest rate and stricter debt-to-income limits to get there.
The exact amount depends on three things: the loan program you choose, your credit score, and how much cash you have available. A borrower with a 750+ credit score and substantial reserves may may have access to for 10 percent down on a conventional loan. A borrower with a 680 credit score or less will likely need 20 to 25 percent down, if a lender will work with them at all.
Vacation home loans also come with a catch that primary residence loans do not: lenders care whether you plan to rent the property out. If you do, the loan becomes an investment property loan, which requires even more down — usually 20 to 30 percent — and carries different tax and insurance rules. If you say you will not rent it, you must sign a statement to that effect, and lenders do verify this occasionally.
Key Takeaways
- Conventional vacation home loans require 10 to 25 percent down, with most lenders landing at 15 or 20 percent as their standard minimum.
- Your credit score and cash reserves directly affect how low a down payment a lender will accept; scores below 700 usually mean 20 percent or higher.
- If you plan to rent the property, the loan becomes an investment property loan and requires 20 to 30 percent down, with stricter underwriting.
- Lenders verify that vacation homes are not being rented out, so misrepresenting the property's use can result in loan denial or acceleration.
- Down payment requirements vary by lender, so comparing offers from banks, credit unions, and mortgage brokers can reveal lower minimums.
How vacation home loans differ from primary residence mortgages
Lenders treat vacation homes as higher risk than primary residences because you are less likely to default on a home you live in every day. If money gets tight, you will pay the mortgage on your main house first. The vacation property is second priority. That risk premium shows up in two places: the down payment requirement and the interest rate.
A primary residence mortgage with a 620 credit score might be available at 10 percent down. The same borrower on a vacation home will face a 20 percent minimum and a rate that is 0.5 to 1 percent higher. Some lenders will not offer vacation home loans at all below a certain credit score — often 680 or 700 — regardless of down payment size.
Vacation home loans also come with stricter debt-to-income limits. On a primary residence, many lenders allow you to carry total monthly debt payments up to 43 to 50 percent of your gross monthly income. On a vacation home, that ceiling often drops to 36 to 43 percent. This means even if you have enough cash for a down payment, the monthly mortgage payment itself might disqualify you if you carry other debt.
Down payment ranges by loan type
The loan program you choose determines the floor. Here is what the major options look like:
| Loan Type | Typical Down Payment Range | Credit Score Minimum | Notes |
|---|---|---|---|
| Conventional (conforming) | 10–25% | 680–700 | Most common; rates vary by down payment size and credit score |
| Jumbo (over conforming loan limits) | 15–30% | 700+ | Larger loans; stricter underwriting; fewer lenders offer them |
| Portfolio/Bank-held | 10–20% | 660+ | Lender keeps loan; more flexible but higher rates; limited availability |
| Investment property (if renting) | 20–30% | 700+ | Different underwriting; rental income may offset down payment need |
Conventional loans are the most common and usually the cheapest option if you may have access to. They are sold to Fannie Mae or Freddie Mac after closing, which is why they have standardized rules. Jumbo loans are for properties above the conforming loan limit (which changes yearly but is around $766,000 for most of the country in 2024). Jumbo lenders are pickier about credit and reserves because they cannot sell the loan to a government-backed entity.
Portfolio lenders are banks that keep loans on their books, so they set their own rules. They may accept lower credit scores or offer 10 percent down when conventional lenders want 15. The trade-off is a higher interest rate and fewer options to choose from. Portfolio lenders are most common at smaller regional banks and credit unions.
What lenders look at beyond the down payment amount
The down payment is only one piece of the underwriting puzzle. Lenders also examine your cash reserves — money left over after you close the loan. On a primary residence, lenders typically want to see one to three months of mortgage payments in reserves. On a vacation home, that expectation is higher: usually three to six months. If you are putting 10 percent down, you need substantial reserves to offset the lower equity cushion.
Your debt-to-income ratio matters more on a vacation home than on a primary residence. Lenders calculate this by dividing your total monthly debt payments (including the new mortgage) by your gross monthly income. A ratio above 43 percent often disqualifies you, even if you have a large down payment. If you carry student loans, car payments, or credit card balances, these reduce how much house you can afford.
Employment history and income stability are scrutinized more closely on vacation home loans. Lenders want to see two years of consistent income from the same source. If you are self-employed, you will need two years of tax returns and possibly a CPA letter. A recent job change, even to a better-paying role, can trigger additional documentation requests.
The rental property complication
If you plan to rent the vacation home out — even occasionally, through Airbnb or seasonal leases — the loan becomes an investment property loan. This requires 20 to 30 percent down and stricter underwriting. Lenders will ask for a rental agreement or lease, proof of rental income history if you have owned similar properties, and sometimes a property management plan.
Some lenders allow you to count projected rental income toward your debt-to-income ratio, which can help you may have access to for a larger loan. But this requires documentation: a lease agreement, a property management company's estimate of rental income, or a professional appraisal that includes rental comparables. Lenders are cautious here because rental income is less stable than employment income.
If you tell a lender the property will not be rented and later rent it out, you are in breach of the loan agreement. Some lenders do verify this by checking property management websites or tax records. The consequences can range from a demand to refinance to loan acceleration (the lender calls the entire balance due when ready). It is not worth the risk.
How to lower your down payment requirement
If 20 percent down feels out of reach, there are a few legitimate paths forward. The first is to shop around. Different lenders have different appetites for vacation home loans. A credit union may offer 10 percent down where a large bank wants 20 percent. A mortgage broker can access multiple lenders at once and tell you which ones will work with your credit score and income situation.
The second is to improve your credit score before you explore. A 50-point increase from 680 to 730 can drop your required down payment from 20 percent to 15 percent and lower your interest rate by 0.25 to 0.5 percent. This takes time — usually three to six months of on-time payments and lower credit card balances — but the savings over a 30-year mortgage are substantial.
The third is to increase your cash reserves. If you have a 10 percent down payment but only one month of reserves, lenders may require you to put 15 or 20 percent down instead. Saving an additional three to six months of mortgage payments can unlock a lower down payment requirement. This is especially true for jumbo loans and portfolio lenders, who use reserves as a risk buffer.
The fourth option is to consider a primary residence loan if you genuinely plan to live in the vacation home part of the year. Some lenders will treat a property as a primary residence if you occupy it for at least six months per year. This can lower your down payment to 5 to 10 percent and reduce your interest rate. You will need to sign an occupancy affidavit, and lenders may verify this.
Frequently Asked Questions
Can I put less than 10 percent down on a vacation home?
Rarely. Most conventional lenders have a 10 percent floor, and many will not go below 15 percent. Portfolio lenders at smaller banks or credit unions occasionally offer 5 to 10 percent down, but the interest rate will be higher and you will need strong credit and substantial reserves. Some lenders will not offer vacation home loans below a certain down payment threshold at all.
Does my credit score really affect the down payment amount?
Yes, significantly. A credit score of 750+ may may have access to you for 10 percent down on a conventional loan. A score of 680 to 700 usually requires 15 to 20 percent. Below 680, many lenders will not work with you on a vacation home, or they will demand 25 to 30 percent down. Credit score is one of the first things a lender checks, and it directly determines what programs you are may be able to access for.
What happens if I rent out the vacation home later?
You are technically in breach of the loan agreement if you told the lender you would not rent it. Some lenders do verify occupancy through tax records or property management sites. If discovered, the lender can demand you refinance into an investment property loan or call the entire balance due. It is better to tell the lender upfront if you might rent it, even if it means a higher down payment.
Do I need to have the down payment in cash, or can I borrow it?
Lenders require the down payment to come from your own funds — savings, investments, or a gift from a family member. You cannot borrow the down payment from another lender. If you receive a gift, the lender will ask for a gift letter from the donor stating it is a gift, not a loan, and that they do not expect repayment. Some lenders limit how much of your down payment can come from gifts.
Will a larger down payment lower my interest rate?
Yes. Putting 20 percent down instead of 10 percent typically lowers your rate by 0.25 to 0.75 percent, depending on the lender and market conditions. Over a 30-year mortgage, this can save tens of thousands of dollars in interest. A larger down payment also reduces the lender's risk, so you may see better terms on other loan features as well.