Vacation property down payment pros and cons

[Steve Bell]

Looking at a STR to make first real estate deal on. Can anyone tell me why a lender might discourage 10% down on a vacation rental? I understand it's possible that interest rates would be higher than putting down 20%, but would there be any disadvantages of putting only 10% down on a vacation rental other than interest rate? Especially if I am trying to minimize out of pocket funds to begin investing. Thanks for any advice.

[JD Martin]

Other than PMI and a higher interest rate/higher payment, nothing. More money down is better for the lender. If you can absorb the differences and you're going to be using leverage anyway, you might just as well preserve as much of your cash as possible.