By Ryan Champion, CMA, CREV, Certified Mortgage Advisor in Durango, Colorado
Southwest Colorado has always drawn second-home buyers. Families from Texas, Arizona, and New Mexico have summered in Durango and Pagosa Springs for generations, and places like Vallecito Lake, Purgatory, and Telluride stay on a lot of wish lists. One of the first questions I hear from these buyers is whether they can buy a second home here without a down payment.
The honest answer: true zero-down options for a second home are rare. There are ways to reduce the cash you need, and a few situations where little or nothing down is possible, but each comes with tradeoffs. Here is what actually works in our market.
Why second homes usually need more cash up front
Most zero-down and low-down programs, including VA, USDA, and FHA loans, require that the home be your primary residence. For a true second home, conventional financing typically starts at 10% down for well-qualified buyers, often with stricter credit standards and cash reserves required after closing.
Lenders see more risk in a second home because if money gets tight, people protect the home they live in first. That doesn't make a mountain getaway out of reach. It just means planning ahead.
Second home or investment property? It matters
Lenders define a second home as a property you personally use for part of the year, that is suitable for year-round living, and that you control. If your plan is to rent it out most of the time as a vacation rental, a lender will likely treat it as an investment property, which usually means a larger down payment and a different rate. A DSCR loan, which qualifies you based on the property's rental income, is one option for that path.
Be upfront about how you'll use the home. Occupancy is something lenders take seriously, and getting it wrong can cause real problems. If short-term rental income is part of your plan, check local rules before you make an offer. The City of Durango requires a vacation rental permit and only allows them in certain areas, and the Town of Pagosa Springs and Archuleta County each require their own permits.
Price points and loan limits in our market
Durango Area Association of Realtors MLS data for the second quarter of 2026 shows why this matters. In-town Durango homes sold for a median of $901,500 and Durango country homes for $915,000. Near Purgatory Resort, mountain-area single-family sales jumped 120% over 2025, at a median of $2,650,000. Condos and townhomes run lower, with medians of $575,000 in Durango and $498,950 in the mountain area. Those numbers matter because the 2026 conforming loan limit in La Plata, Archuleta, and Montezuma counties is $832,750. Loans above that amount are jumbo loans, which usually require more down and larger reserves. San Miguel County, home to Telluride, is designated a high-cost area with a higher conforming limit, though prices there often exceed it too.
Ways to reduce the cash you need
1. Make Southwest Colorado your primary home. If you are relocating here for good, the picture changes completely. VA loans allow zero down for eligible veterans. USDA loans allow zero down in eligible rural areas, which can include parts of La Plata, Archuleta, and Montezuma counties. FHA loans start at 3.5% down, and Colorado down payment assistance programs may help eligible buyers. If you're 62 or older, a HECM for Purchase (a reverse mortgage used to buy a home) lets you buy your Durango home with a significant down payment and no required monthly mortgage payment afterward. This only applies if the home will truly be your main residence. It is not a shortcut for buying a vacation home.
2. Use equity from your current home. Many second-home buyers here fund the down payment with a HELOC, home equity loan, or cash-out refinance on their primary home in Albuquerque, Phoenix, Dallas, or the Front Range. This shifts the risk rather than removing it, since you'll be carrying more total debt. If your primary home is in Texas, keep in mind that Texas limits cash-out borrowing to 80% of your home's value. I'm licensed in Colorado, New Mexico, Arizona, and Texas, so I can often help with both sides of the transaction. For a home in another state, I have Barrett Financial Group team members nationwide who can help.
3. Buy from family with a gift of equity. Plenty of Southwest Colorado cabins have been in the same family for decades. When a parent or relative sells to you below market value, the difference can count toward your down payment. It needs to be documented properly with your lender and title company.
4. Ask about seller financing. Owner-carry arrangements are more common here than in many markets, especially on rural land, cabins, and off-grid properties that can be hard to finance conventionally. Terms vary widely, so have an attorney review the agreement and make sure it fits your long-term plans.
5. Negotiate seller credits for closing costs. Even if you need 10% down, a seller can often contribute toward your closing costs within program limits, which keeps more cash in your pocket on closing day.
What about assuming the seller's mortgage? Assumable FHA and VA loans can carry attractive rates, but most assumptions require that you live in the home, so this usually works only if it will be your primary residence.
The costs of mountain ownership beyond the mortgage
A lower down payment means a bigger loan and a higher monthly payment, and that adds up fast on a home you don't live in full time. In Southwest Colorado, budget for:
Homeowners insurance, which can cost more in wildfire-prone areas
- HOA fees, which The Durango Herald noted have been rising and weighing on demand
- Snow removal, propane, and winterizing when the home sits empty
- Well, septic, and road maintenance on rural properties
- Property management, permits, and lodging taxes if you rent it out
When it may make sense to wait
Sometimes the smartest move is to keep saving. A larger down payment can lower your payment, help you avoid a jumbo loan, and leave you with healthy reserves. Waiting doesn't mean giving up on the cabin. It means buying it with less stress.
Frequently asked questions
How much do I need to put down on a second home in Durango? For a conventional second-home loan, plan on at least 10% down. If the loan amount exceeds the $832,750 conforming limit, jumbo guidelines usually require more.
Can I rent out my second home in Durango or Pagosa Springs? Occasional rental may be allowed under a second-home loan, but local permits still apply. If renting is the main purpose, an investment property loan is usually the better fit.
Can projected rental income help me qualify for a second-home loan? In most cases, no. Lenders generally qualify second-home buyers on their own income. Rental income is more often used with investment property loans such as DSCR loans.
Do you work with out-of-state buyers? Yes. I'm licensed in Colorado, New Mexico, Arizona, and Texas, which covers most buyers who come here from out of state. If you need financing in another state, such as on your current home, I have Barrett Financial Group team members nationwide who can help.
Let's build a plan that fits
The question isn't only whether you can buy a second home with little or nothing down. It's whether the purchase fits your life and stays comfortable over time. I shop more than 160 lenders and am happy to walk through your options with no pressure. Call or text me at (970) 403-5677, email rchampion@barrettfinancial.com, or meet with me by appointment at my Durango office at 1099 Main Ave #211.
Please note: These materials are not from HUD or FHA and were not approved by HUD or a government agency.