10% dp vacation home loan requirements

[Tyler Smith]

I just closed on a 10% down vacation loan (second home mortgage) and one of the requirements is to be in the property 14 days out of the year.  Does anyone have any experience with this and how to report that you stayed in the home or who to report to etc?  

[Ryan Moyer]

Quote from @Michael Baum:

We have seen this question from time to time but I haven't seen a 14 day minimum requirement from the lenders themselves. It is all about the IRS rules regarding deductions etc.

I believe that both the lenders and the IRS have rules regarding 14 days, but in opposite directions.

Lender wants you to use the property 14 days OR MORE for it to qualify as a vacation home.

IRS wants you to use property for 14 days OR LESS for it to qualify as an investment rather than a residence so you can still deduct expenses.

So technically, in order to satisfy both the lender and the IRS when buying a property via a vacation home loan and using it primarily as an STR you would need to visit EXACTLY 14 days. If you visit fewer than that you violate the lender guidelines. If you visit more than that you violate the IRS guidelines.

In practice, neither really follows up on either of those, especially the lender.  The lender is already qualifying you based on whether you can afford the property without any rental income from the property considered anyway, so it doesn't really change their risk profile much whether you're renting it out or not when not using it, and how often that is.