How much down payment for an Airbnb? The real numbers by loan type

20%, 25%, or 30% down. PMI, rate spread, and reserves by loan type — what each option actually costs over five years.

The short version: for an Airbnb / short-term rental, plan on 20% minimum, 25% recommended, 30% if you want the best DSCR pricing. Below 20% is essentially unavailable on investment property; above 25% the rate-vs-cash tradeoff stops paying off.

This post walks the math at each tier so you can decide which one fits your cash position. The Down Payment Calculator does the per-deal math; this is the framework that makes the calculator output make sense.

The 60-second answer by loan type

Loan type	Min down	Sweet spot	Why
Conventional (Fannie/Freddie) investment property	20%	25%	20% is the floor for an investment property. PMI is generally unavailable on investment, so 20% down = no PMI. 25% gets a meaningful rate break (typically 25–50 bps lower).
DSCR (non-QM)	20%	25–30%	20% is the floor for most DSCR lenders. Rate pricing improves materially at 25%+ and again at 30%+. Many lenders cap LTV at 75% (i.e., 25% down minimum) for cash-out scenarios.
Portfolio / asset-based	15–25%	varies	Some balance-sheet lenders will go to 15%. Pricing reflects the risk — expect 100–200 bps over conventional.
FHA / VA	3.5–0%	n/a	FHA and VA are owner-occupant only. Cannot use for pure-investment STR.
House hack / primary then convert	3–5%	5%	If you’ll live in the unit for 12 months, conventional primary residence allows 3% down; converted to STR after the occupancy period. Different math entirely.

The conventional 20% vs 25% math

Take a $400,000 STR. Loan-amount difference: $20,000 cash up front.

At a 7.5% conventional 30-year fixed (representative May 2026), 20% down means $320,000 loan. 25% down means $300,000 loan. Plus the 25% scenario usually clears a rate-break tier — call it 7.25%.

	20% down	25% down
Down payment	$80,000	$100,000
Loan amount	$320,000	$300,000
Rate	7.50%	7.25%
Monthly P&I	$2,237	$2,047
5-yr interest	$115,840	$105,520
5-yr total cost (incl. extra $20k down)	$115,840	$125,520

Over 5 years, 20% down costs you ~$10k more in interest. But 25% down costs $20k cash up front. Break-even is somewhere between year 7 and year 10. If you’ll sell within 5 years or refinance early, 20% is cheaper. If you’ll hold long, 25% wins.

The DSCR math is different

DSCR loans price on the property’s cash flow, not your W-2. More down = lower payment = higher DSCR = lower rate. This is a non-linear relationship.

A property at $4,200/month projected rent against PITIA:

20% down, $320k loan, 8.5% DSCR rate: PITIA $3,500/mo. DSCR = 4,200 / 3,500 = 1.20 (clears 1.20 min, but on the bubble)
25% down, $300k loan, 8.0% DSCR rate: PITIA $3,250/mo. DSCR = 4,200 / 3,250 = 1.29 (clears comfortably, better tier)
30% down, $280k loan, 7.625% DSCR rate: PITIA $3,050/mo. DSCR = 4,200 / 3,050 = 1.38 (clears with margin, best tier)

On DSCR, the extra 5% down isn’t just “buy a lower rate” — it’s “qualify for a better tier with much better pricing.” The DSCR rate-spread math is in DSCR Loan vs. Conventional for Airbnb. Visio Lending Kiavi

Don’t forget reserves

Conventional lenders typically require 6 months of PITIA in seasoned reserves on top of down + closing costs. DSCR lenders often require 6–12 months. On a $400k STR with PITIA ~$3,400/mo, that’s $20,400–$40,800 in liquid funds that need to be in your account 60+ days before closing. Many buyers underfund this and the deal dies in underwriting.

Year-1 Cash Needs calculator walks the full all-in stack: down + closing + furnishing + reserves + first-month operating capital. Most buyers find they need 50–80% more than the down payment alone.

What to actually do

Run the DSCR loan calculator at 20%, 25%, 30% down to see which tier your property’s projected rent clears.
Run the Down Payment Calculator at the conventional rate AND a DSCR comparable. The difference is the cost of choosing DSCR.
Calculate Year-1 Cash needs at the down-payment level you pick — make sure you have the reserves to clear underwriting.
Only then decide. The cheapest down-payment is the one where your deal actually closes.

Before you lock a down-payment number, run it against the free 47-point pre-purchase checklist — reserves and seasoning are two items buyers routinely undersize until underwriting catches them.

The wrong move is starting at 20% because it sounds cheaper and then watching the appraisal come in low + the rate tier degrade + the reserves come up short. The right move is sizing to 25% if you have it; 20% only if reserves are tight and you’ll refinance into conventional within 24 months.