Most answers to this question stop at the down payment. That is the biggest line, but it is about three fifths of what you actually have to produce, and the part people forget is money the lender wants to see rather than money you hand over.
What do you pay for before an Airbnb opens?
Four things, in the order they come at you.
- The down payment. Freddie Mac caps a purchase on a one-unit investment property at 85% of the price, so 15% down is the floor on an investment loan (Freddie Mac, maximum LTV requirements). Under 20% a conventional loan also charges mortgage insurance.
- Closing costs. Lender fees, title, recording, prepaid taxes and insurance. The calculator carries 3% of the price as a placeholder.
- Furniture and setup. Beds, a sofa, a kitchen, towels, locks, a camera at the door. A long-term rental skips this entirely.
- Reserves. Months of the full payment that have to be in an account you can show the lender, on top of everything above.
The last one surprises people, so it gets its own section below.
How much cash does a $350,000 Airbnb take?
The calculator opens on a $350,000 house let at $375 a night, booked 65% of the year, which is about 237 nights. Property taxes are $4,200 a year and the policy is $2,400. The loan is 20% down on a 30-year mortgage at 7%, and the furnishing budget is $25,000.
| Cash | |
|---|---|
| Down payment (20%) | −$70,000 |
| Closing costs (3%) | −$10,500 |
| Furniture and setup | −$25,000 |
| Six months of reserves | −$14,477 |
| Before the first guest | −$119,977 |
These are example figures, not a forecast for any market.
Three of those four lines leave your account for good. The reserves stay yours. That matters when you are deciding whether you can afford this: $105,500 is spent, and $14,477 is parked.
Once it is running, this example takes in $88,969 a year and clears $828 a month after the platform fee, a manager at 20%, cleaning, supplies, utilities, repairs and the mortgage. The full walk through of this Airbnb shows every one of those lines.
What are reserves, and why six months?
Reserves are liquid assets left after closing, counted in months of the property’s full payment: principal, interest, taxes, insurance and any association dues.
Fannie Mae’s Selling Guide sets the floor by occupancy type. It asks for “six months’ reserves” on an investment property transaction and “two months’ reserves for a second home transaction” (Fannie Mae B3-4.1-01, dated 08/07/2024). Six months of this house’s payment, taxes and insurance is $14,477.
Two further points from the same page are worth knowing before you apply. Additional reserves are required when a borrower has multiple financed properties, starting at 2% of the aggregate unpaid balance with one to four of them. And the guide says Desktop Underwriter “will determine the reserve requirements”, with more possible on its overall risk assessment, so the six months is a floor rather than a ceiling.
That page sets the reserve by the occupancy type on the loan, not by how you intend to let the house, so a nightly rental and a long-term one on the same investment loan are asked for the same six months.
Does a second-home loan need less cash?
On paper, a lot less. Freddie Mac allows 90% on a second home, so 10% down, and Fannie Mae asks two months of reserves instead of six. On this house that is $35,000 down, $10,500 of closing costs and the same $25,000 of furniture, which is $70,500 at closing. Two months of reserves at 10% down, with mortgage insurance in the payment, is about $5,732. Call it $76,232 against $119,977.
The catch is that a second-home loan is a promise about how the house will be used, and the conditions on that promise are the lender’s to set and enforce. Ask what yours allows in writing before you build a plan on the lower number.
What the $119,977 leaves out
- The gap before the first booking. Furniture gets delivered, photos get taken, reviews start at zero. The reserves are sized for this, which is part of why lenders want them.
- Mortgage insurance, on any investment loan under 20% down.
- The platform’s cut, which is already in the monthly figures above. Airbnb’s help center says most hosts on its single-fee structure pay 15.5%, with the rest typically 14% to 16% (Airbnb, service fees). On $88,969 a year that is real money, and the host fees post shows what it does to a month.
- Local permission. Registration, licences, nightly caps and outright bans are city and county rules, and some of them cost money every year. Check yours before you make an offer, because an Airbnb that can’t be let is a long-term rental with $25,000 of furniture in it.
The furniture number above is one budget, not a rule. What it buys, and what three different budgets look like, is in the cost to furnish an Airbnb.
How do you work out your own number?
Start with the price you are actually looking at and work down the four lines.
- Multiply the price by your down payment, and add 3% for closing until a lender gives you a real estimate.
- Price the furniture list for that house, room by room, rather than scaling someone else’s total.
- Add six months of the payment, taxes, insurance and dues, and keep it liquid.
- Then check the monthly numbers at a booking rate you would still accept in a slow year, not at the rate that makes the deal work.
Put your price, nightly rate and occupancy into the short-term rental calculator and it will show the cash at closing beside the monthly cash flow, so you can see which number is the binding one.