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Updated over 2 years ago on . Most recent reply

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Steve Bell
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Question about required down payment on vacation rental property

Steve Bell
Posted

Hi BP community,

My partner and i are hoping to purchase a short term rental very soon for the first time. 

My lender asked me how much we plan to put down for the purchase and as we understand it a vacation rental property can be purchased for as low as 10% down. My lender recently told me if the property is a second home we can put 10% down, but if we are purchasing a vacation rental we have to put down 15%, what we would like to know is why? We disclosed to our lender we plan to use house as an STR, but our lender insists on 15%.

Can anyone verify this? Is a must to put down 15%? Is this a requirement from every lender or could lenders say we will give you the loan, but this particular lenders requires 15% down? Any insight would be greatly appreciated! Thanks!

Most Popular Reply

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John Underwood
#1 Short-Term & Vacation Rental Discussions Contributor
  • Investor
  • Greer, SC
15,243
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12,496
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John Underwood
#1 Short-Term & Vacation Rental Discussions Contributor
  • Investor
  • Greer, SC
Replied
Quote from @Steve Bell:

Hi BP community,

My partner and i are hoping to purchase a short term rental very soon for the first time. 

My lender asked me how much we plan to put down for the purchase and as we understand it a vacation rental property can be purchased for as low as 10% down. My lender recently told me if the property is a second home we can put 10% down, but if we are purchasing a vacation rental we have to put down 15%, what we would like to know is why? We disclosed to our lender we plan to use house as an STR, but our lender insists on 15%.

Can anyone verify this? Is a must to put down 15%? Is this a requirement from every lender or could lenders say we will give you the loan, but this particular lenders requires 15% down? Any insight would be greatly appreciated! Thanks!

You are wanting to buy a property to use as a business with a partner so you are not buying a 2nd home. Its that simple.

15% down is still pretty good.
  • John Underwood
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