Buy an Airbnb for only 10% Down

[Luke Carl]

Truth be told I stumbled upon this because i'm about to get an appraisal to drop the MI on a second home I purchased a few years ago that I have been Airbnb-ing since day one. 

While it used to be unspoken, The Fannie "Second Home Rider" now allows 10% down second home loans to allow homeowners to Airbnb (VRBO) their property. 

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First and foremost.... make sure the numbers work before you opt for a small down payment. 

Also... The home would need to be a minimum of 65 miles from your primary residence - which you do not have to own. 

[Parker Borofsky]

@Luke Carl this is correct.  It does still need to meet the Fannie Mae definition of a Second Home to qualify for 10% down.  Here is the language in the rider:

Occupancy. Borrower will occupy and use the Property as Borrower’s second home. Borrower will maintain exclusive control over the occupancy of the Property, including short-term rentals, and will not subject the Property to any timesharing or other shared ownership arrangement or to any rental pool or agreement that requires Borrower either to rent the Property or give a management firm or any other person or entity any control over the occupancy or use of the Property. Borrower will keep the Property available primarily as a residence for Borrower’s personal use and enjoyment for at least one year after the date of this Second Home Rider, unless Lender otherwise agrees in writing, which consent shall not be unreasonably withheld, or unless extenuating circumstances exist which are beyond Borrower’s control.

Underwriting guidelines straight from Fannie are:

Must be occupied by the borrower for some portion of the year

restricted to one-unit dwellings

must be suitable for year-round occupancy

Borrower must have exclusive control over the property

Must not rental property or a timeshare arrangement (referring to long term rental)

Cannot be subject to any agreements that give a management firm control over the occupancy of the property

Hope this helps some of you!