Vacation rental loan

[Randy Dulac]

I am looking at buying a couple of short term vacation rentals in my state.  I understand that 10% down is all that is required.  I also understand that I am only allowed 1 vacation rental loan per vacation area.  I have heard that my wife could be the holder of one note and I could be the holder of another note, bringing the total to 2 properties we could own under this type of loan.  I know this is probably a silly question, but if going this method, won't we be greatly limited to the amount of a loan we could get on a property?

[Alexander Kistler]

Hey Randy! I’ve been going through the exact same thing. It was my first impression that it would be better to go the route of one loan per spouse.

However after talking with several lenders, they convinced me it probably wouldn’t help us to do the loans as individuals.

The reason being is that we already share a mortgage on our primary residence and if we were to do a loan as an individual - that individual's income would have to be able to cover the entire existing mortgage as well as the new loan for the STR. In our situation, this was going to be too high of a DTI to get approval for a new loan. But together we were approved.

If you both are high earners with not much existing debt, maybe it works?

You could also bring someone else in to partner with that could help carry the loan.

I did want to point out that there are specific criteria for qualifying for a second home loan. You said you wanted to buy in your state, so just make sure you are looking (I think at least 50 mi) away from your primary residence.