Down payment percentage for investment property vs second home

[Cheryl Hewitt]

I'm interested in purchasing a vacation home (second home) that will be for our use, but also short-term rental when we are not occupying it ourselves. The property is 88 miles from my home. I estimate that we'll occupy it between 14-30 days per year. 

I am getting mixed information on different sites as to whether this would need to be financed as an investment property rather than a second home.

What percentage should I expect to put down? 

Will I need to have reserves to cover 5-6 months of payments? 

TIA

[David M.]

@Cheryl Hewitt

The mixed message is probably because your loan officer is having different opinions whether this is a vacation or investment property.  Ultimately, they have to make a case to Underwriting for one or the other.  So, its a matter of how/what you tell the loan officer and whether he/she thinks she can successfully make the case.  If you can get it categorized as a second home, then your down payment is whatever your loan product allows and you can afford.  If its an investment property, usually 20% down is as low as you can go, 25% down is the your best interest rate break point, and be prepared to pay an extra ~1.25% in interest because its an investment property.

Good luck.