I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. Call (800) 239-1103.
Palm Springs is one of California’s most popular second home and vacation property markets — and for good reason. The weather, the midcentury modern architecture, the Palm Canyon Drive scene, the spa culture, and the proximity to Los Angeles and San Diego make it a perennial favorite for buyers seeking a desert retreat. If you’re considering a vacation home purchase in Palm Springs or the broader Coachella Valley, here’s what you need to know about the mortgage process.
Second Home vs. Investment Property: An Important Distinction
Mortgage lenders treat vacation/second homes and investment properties differently — and the distinction matters significantly for your financing options.
Second home: A property you intend to occupy personally for some portion of the year. Lenders generally require that you live there at least part of the year, and the home must be reasonably accessible (not a timeshare or fractional ownership). Second homes typically qualify for lower interest rates than investment properties.
Investment property: A property purchased primarily to generate rental income. Higher down payment requirements, higher interest rates, and more stringent qualifying standards apply. However, rental income can be used to help qualify for the loan.
If you plan to rent your Palm Springs home on Airbnb or VRBO frequently, your lender will likely classify it as an investment property rather than a second home. We help you navigate this classification correctly from the start.
Down Payment Requirements
- Second home (conventional): Minimum 10% down, though 20% or more gets you the best rates and eliminates PMI
- Investment property (conventional): Minimum 15–25% down depending on the property type and loan program
- FHA: FHA loans are only available for primary residences — not vacation homes or investment properties
- VA: VA loans are for primary residences only, with limited exceptions for military reassignment situations
For most Palm Springs vacation home buyers, conventional financing is the path — and planning for 20–25% down gives you the most flexibility and best pricing.
Using Rental Income to Qualify
If you plan to rent your Palm Springs home on Airbnb or VRBO, that projected rental income may be usable in your qualification calculation — but the rules vary by loan program and how you’ve structured the purchase:
- Investment property loans: Lenders typically allow 75% of market rental income (per an appraiser’s rent schedule) to count toward qualifying income
- Short-term rental programs: Some portfolio lenders offer DSCR (Debt Service Coverage Ratio) loans that qualify based on projected rental income alone — no personal income verification required
- Airbnb history: If you already own rental properties with documented Airbnb income, that history can strengthen your file
The Palm Springs vacation rental market is strong year-round, with peak demand during the winter months (November–April), festival season (March–April), and Thanksgiving/Christmas holidays. A well-located property can generate meaningful rental income.
The Leased Land Question for Vacation Buyers
Palm Springs vacation home buyers frequently encounter leased land properties — and the numbers often work especially well for vacation and short-term rental purposes:
- Lower purchase price means lower capital required and lower monthly payment
- Lower property taxes reduce annual holding costs
- For buyers with a 10–20 year vacation property plan, the lease term is typically not a concern
We specialize in financing vacation properties on Indian leased land in Palm Springs. Our leased land mortgage guide covers everything you need to know about this unique market feature.
What Lenders Look for in Vacation Home Buyers
Beyond the down payment, lenders evaluating vacation home loans want to see:
- Strong primary residence: You should own (and be current on the mortgage of) your primary home
- Reserves: Typically 2–6 months of mortgage payments (for both properties combined) in liquid assets
- Debt-to-income ratio: The combined payment on your primary home and vacation property must fit within DTI guidelines
- Location/intent logic: The vacation home should make geographic sense — a Palm Springs second home for an LA-based buyer is very different from buying a “vacation home” 15 minutes from your primary residence
Popular Palm Springs Neighborhoods for Vacation Buyers
Old Las Palmas: Historic neighborhood with grand estates, fee simple, ultra-premium pricing.
Movie Colony / Tennis Club: Central Palm Springs, mix of leased and fee, classic midcentury estates and condos.
Tahquitz River Estates: Affordable entry for vacation buyers, good mix of leased and fee.
Sunrise Park: Established neighborhood, affordable leased land condos popular with vacation rental investors.
South Palm Springs: Active adult communities (many 55+), excellent for retirement/vacation hybrid buyers.
Rancho Mirage & Palm Desert: Gated communities, golf courses, luxury second homes for buyers from outside the area.
Get Pre-Approved for Your Palm Springs Vacation Home
The Palm Springs vacation home market moves quickly, especially during winter buying season. Getting pre-approved before you start shopping puts you in a much stronger position when you find the right property.
DiVita Home Finance specializes in second home and investment property financing throughout Palm Springs, Palm Desert, Rancho Mirage, La Quinta, and all Coachella Valley communities. We understand leased land, vacation rental qualification, and every nuance of the desert market.
Call 800-239-1103 today or apply online to get your vacation home pre-approval started.
Related Resources
- Palm Springs Mortgage Specialists
- Coachella Valley Mortgage Broker
- Palm Springs Airbnb Investment Mortgage Guide
- 55+ Community Mortgage Coachella Valley
- Palm Springs Leased Land Mortgage Guide
Frequently Asked Questions
What is the minimum down payment for a Palm Springs vacation home?
For a second home (conventional loan), the minimum down payment is 10%, though 20% or more gets you the best rates and eliminates PMI. For an investment property, expect 15–25% down depending on the loan program. FHA and VA loans are not available for vacation homes — those programs require primary residence occupancy.
Can I use Airbnb rental income to qualify for a Palm Springs vacation home loan?
Yes, depending on how the property is classified. For investment properties, lenders typically allow 75% of market rental income from an appraiser’s rent schedule toward qualifying income. DSCR loans qualify based on projected rental income alone with no personal income verification required — a popular option for Palm Springs short-term rental investors.
How does the second home vs. investment property classification affect my mortgage rate?
Second home loans typically carry rates 0.25–0.50% higher than primary residence loans. Investment property loans are usually 0.50–0.75% higher than primary residence rates. If you plan to rent frequently on Airbnb or VRBO, your lender will likely classify the property as an investment property rather than a second home, which affects both rate and down payment requirements.
Talk to Michael Directly
DiVita Home Finance | Tiburon, CA | In lending since 2000, founded DiVita Home Finance in 2007. Michael DiVita DRE #01372066 | NMLS #241655. Company DRE #01818285 | NMLS #323700.
💬 Text: (310) 849-9124
