Down Payment For Rental Property: Get Your Dream Vacation Home

Being located in the majestic Pacific Northwest, we chat with clients daily about financing a vacation home. Beyond the obvious recreational benefits of owning a vacation home, a secondary residence or investment property is a smart way to diversify your assets. In the current era of Airbnb, renting (even if only seasonally) can be a smart long-term strategy. There have never been more ways to create positive revenue streams from owning real estate.


In addition, more people thannever are living in city centers, and with rental prices in urban areas soaring around the country, now is a solid time to consider becoming a landlord. (We’ve even set aside a few tips for first-time landlords in our PDX Home Loan Blog that you can mull over when you have a chance.)

Nonetheless, as with any major financial decision, there are potential tax bracket ramifications, deductions, investment property mortgage rates, and credit requirements to take into account. A proper down payment plan can create optimum leverage of cash, cash flow, and liquidity. Come in for a consultation today, and we’ll show you the ins and outs of 21st-century investment, rental, and vacation property strategy.


Beyond offering well-deserved rest and relaxation, a vacation home can be a sound “lifestyle” investment. What do we mean by that? The decision to invest your money into a physical sanctuary, or special place to retreat with your loved ones isn’t always always driven with cash flow or income in mind. However, simply owning real estate will usually create positive equity over time in addition to the positive lifestyle effect.
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For the past few years, the vacation home mortgage market has been piping hot. In fact, according to Forbes, Americans purchased more than 700,000 vacation homes in 2013 alone.

While a second primary residence may be a solid financial move for individuals looking to diversify their assets, a vacation home loan has its own set of risks and qualifiers to understand upfront. For example, these properties typically have more rigid credit requirements than a traditional home loan.

That’s because a secondary primary residence underwriting puts more pressure on a borrower’s income than the investment loan requirement. With a second primary residence, the borrower’s income will need to cover all existing home loan debt plus the new vacation home mortgage.

Your options for financing a vacation home will also vary based on numerous factors and the new Tax Cuts and Jobs Act could pose risks for some borrowers. Even so, there are many tricks and tips to getting the best deal possible, and we can help. For example, did you know that you could potentially avoid paying private mortgage insurance by throwing down a little more cash toward the vacation home mortgage down payment?

We’re here to answer your questions about choosing a smart down payment for investment property, your insurance and tax considerations, and everything else you need to know to finance your new vacation home. Come in for a chat today!


Today, with platforms like Airbnb and others, it’s easier than ever for owners to automate the entire booking process and simply sit back, relax, and watch the assets pile up from afar. With the right plan, location, and digital infrastructure in place, it’s totally possible for a mortgage on rental property to pay for itself.
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A vacation rental is certainly a long-term investment, but there are plenty of ways to tap into these resources in the short-term as well. In the past, chasing bookings and finding third-party entities to handle cleaning made the entire vacation rental process a pain for owners. Today, technology has changed the entire vacation rental paradigm.

Further illustrating this short-term investment potential, according to Forbes, one in three of all US travelers stayed in a privately owned rental in 2015. This represents a nearly 25 percent increase from just five years earlier. So what are your vacation rental property mortgage options? What’s the average down payment for rental property?

Come in for a consultation and find out these answers and many more! At PDX Home Loan, we strive to use the entire vacation rental property mortgage process to create optimum leverage for our clients. Our approach will include not only our expertise but also the insights of other specialists in relevant financial areas to help you make the right decision.


It’s important to note, that the vast majority of first-time landlords don’t actually buy rental property. Instead, these individuals buy primary residences, live in these homes for a few years, and then acquire a new primary residence while converting the last home into a rental property.
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Just as we noted with vacation properties, rental property mortgages also have stringent borrower requirements and not all properties are eligible for a rental property mortgage or home equity financing. For these properties, alternative financing is situationally necessary.

There are many types of home loans to choose from and clients often ask about using an FHA loan for rental property. Unfortunately, you can never use an FHA loan to acquire a rental property. However, you can convert a home that was financed with an FHA loan as a primary residence into a rental property (without refinancing) in some very specific circumstances.

As you can see, the process can become quite complicated rather quickly. Mortgage interest on rental property and mortgage rates for rental property vary based on a laundry list of factors. Be sure to talk to an experienced mortgage lender before you invest your nest egg!

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