Financing a Second Home or Vacation Rental in Durango (2026 Guide)

Durango attracts a steady flow of second-home buyers — Front Range professionals wanting a Purgatory ski base, Texans and Arizonans escaping summer heat, and investors targeting vacation rental cash flow. The financing structure makes or breaks the deal. Here's how to do it right in 2026.

Step 1: Second Home or Investment?

This decision drives your rate, down payment, and what you're legally allowed to do with the property:

Second home loan: for personal use; occasional renting OK, but not full-time. As little as 10% down, rates typically 0.25–0.5% above primary.
DSCR / investment loan: primarily a rental (long-term or short-term). 20–25% down, higher rates, qualifies on the property's income.

Claiming "second home" on a property you Airbnb 11 months a year is mortgage fraud — lenders audit this. Pick honestly.

Durango's STR Rules — Read Before You Buy

The City of Durango caps non-owner-occupied short-term rental permits and restricts new STRs in many residential zones. Existing permits don't always transfer with the property. Outside the city — in La Plata County — rules are looser but still vary by area. Always confirm the STR status of the specific address with the City or County before going under contract.

If your deal only works as a full-time STR, you need a property with an existing transferable permit or one in an STR-friendly zone. Otherwise, underwrite the deal on long-term rent assumptions.

Down Payment by Loan Type

Conventional second home: 10% down minimum
Jumbo second home: 10–20% down
DSCR investment: 20–25% down (better pricing at 25%+)
Conventional investment: 15–25% down depending on units

Popular Durango Vacation Property Markets

Purgatory / Durango Mountain: ski-in/ski-out condos and cabins — historically strong STR performance, but verify HOA rules and permit availability.
Downtown Durango: walkable, near the train depot and Main Avenue — premium nightly rates when permitted.
Animas Valley & Hermosa: larger homes for family rentals; often outside city STR caps.
Vallecito Lake & Bayfield: summer rental demand around the reservoir.

Cash-Out Refinance to Buy in Durango

Many Durango second-home buyers pull cash out of their primary residence to fund the down payment. With equity in a paid-down Front Range or out-of-state home, you can often cover 20–25% down on a Durango property without touching savings. See our cash-out refi guide.

Insurance, Taxes, and HOA

Wildfire-zone properties in La Plata County are seeing higher insurance premiums and tighter underwriting. Some carriers have pulled out of mountain markets entirely. Get an insurance quote before going under contract. Also model property tax escrow on the post-sale assessed value, not the prior owner's tax bill — taxes will reset.

Get the Financing Right Up Front

At Tayton Capital we structure second-home and DSCR loans in Durango regularly. We'll model both scenarios (second home vs. DSCR), verify STR feasibility, and get you to the closing table with the right loan. See our Durango mortgage page or contact us.

📧 tj@taytoncapitalllc.com
📞 970-708-9624

Frequently asked questions

Can I get a second home loan in Durango with 10% down?

Yes — conventional second home loans allow as little as 10% down for properties intended for personal use. Jumbo second home loans typically require 10–20% down depending on loan size and credit.

Are short-term rentals allowed in Durango?

The City of Durango caps non-owner-occupied STR permits and restricts new STRs in many zones. Permits don't always transfer with the property — always verify the specific address with the City or County before purchasing.

What's the difference between a second home loan and a DSCR loan in Durango?

A second home loan is for personal use with limited rental activity (10% down, lower rate). A DSCR loan is for rental properties and qualifies on the rent, not your income (20–25% down, higher rate).