Do you only have to put 10% down for a Vacation Home?

Question

I am currently looking at purchasing a mountain house that is 100+ miles away from my primary home in Georgia.  I have read that for a vacation home you have the ability to only put 10% down instead of 20%.  Where I have received conflicting information, is when you want to rent out the vacation home via Air BNB when you are not there. Will lenders only require 10% down for a vacation home in Georgia that will also be a short term rental when I am not there?  Or will they require 20% down?

Steven Foster Wilson · Answer

Phrasing is key. Is it a vacation house or a rental. Fannie and Freddie will have some things to say about it!

Alexander Kleyman · Answer

I am interested to hear more details on this too.

I was told by my lender that 10% is minimum, as long as it is a certain distance away, “is in a justified vacation location” ie. not another home in a major metro area, and you will spend a minimum # of days residing there.

Also note that PMI will be added on anything less then 20% down payment.

Mark H. Porter · Answer

Your tax guy would appreciate it if you are looking at this as an investment property that you occasionally use when not rented.   it will allow them a lot more flexibility in write-offs.

That being said, I have heard of 10% down in vacation homes.  I know you’ll pay higher rates and down payments on investments.  you certainly don’t want to get caught by the bank renting it more than using it. If you have any ownership in other rentals or any other scenario with the bank wants to see your annual returns then you should be careful.