Most short-term rental and Airbnb loans require 20% to 25% down. That’s a touch more than you’d put on a primary home, and in the same range as — or slightly above — a long-term rental, because the loan is sized to income that moves with the seasons rather than a fixed 12-month lease.
The reason for the bump is straightforward. A short-term rental’s income swings with occupancy and nightly rates, so a lender wants a little more equity in the deal as a cushion. Put simply: the down payment is what makes the lender comfortable financing income that isn’t locked in by a year-long tenant.
What moves the number
Inside that 20%–25% range, a few things decide where you land:
- Property type. A standard single-family short-term rental sits at the low end. A condo runs a bit higher. A condotel — a condo inside a hotel-style building — is the priciest to finance and often asks for 25%–30% or more, because lenders treat it as higher-risk.
- The market. A property in a proven short-term market with strong AirDNA numbers (the market-data report lenders lean on) supports a lower down payment than one in a thin or seasonal market.
- Your profile. Credit and reserves still matter on an income-based loan; a stronger profile can pull the number down.
- Purchase vs. cash-out. Buying is usually the lowest down payment. Pulling equity out with a cash-out refinance leaves more in the deal.
Don’t forget reserves
Short-term rental lenders tend to want more reserves than long-term ones — often six months of payments (principal, interest, taxes, insurance) sitting in the bank after closing. That extra cushion exists for the same reason as the higher down payment: to carry the property through a slow season.
Foreign national buyers
If you’re a foreign national financing an Airbnb, plan toward the higher end — typically 25%–30% — since the down payment is doing double duty, covering both the short-term-rental income variability and the lack of a U.S. credit file.
Budget for closing costs too
On top of the down payment, plan for roughly 2%–5% of the purchase price in closing costs. Knowing that number up front keeps the math honest when you’re sizing up a deal.
A typical deal
A scenario I see often: an investor buying a single-family Airbnb in a strong vacation market, putting 20% down, with six months of reserves in the bank. We qualify it on the AirDNA projection, the cushion satisfies the lender, and it closes. A condotel in the same market would have pushed the down payment toward 30%.
Ready to look at your deal?
The exact number comes down to your specific property and market. Tell us about your deal and we’ll tell you the down payment it takes — in English or Spanish.
By Andres Jara — Alpha Equity Lending (NMLS #1855083). 20+ years in real estate finance, an MS in Finance, and an active South Florida investor and landlord.
