One of the biggest myths about owning a luxury vacation home is that you need to be incredibly wealthy to even consider it. That might be true for sole ownership, but the co-ownership model tells a different story. It’s built on a simple, powerful idea: sharing the costs makes the dream accessible. This starts with the very first financial step—the deposit. A shared ownership deposit is a world away from a traditional down payment. Because it’s based on the value of your share (say, 1/8th of the home), the amount you need upfront is a fraction of what you’d otherwise pay. This guide is here to clear up the confusion and show you just how attainable owning a beautiful second home can be.
Key Takeaways Your deposit is based on your share, not the entire home : The biggest financial advantage is that your deposit is calculated only on the value of your fraction, making the upfront cost much more manageable compared to buying a whole property.Plan for a deposit of 5-10% of your share's value : Most lenders require a deposit in this range, giving you a clear savings goal. The final amount depends on your credit, the home's price, and the share size you choose.Prepare your finances for a smooth process : Getting pre-qualified for a loan before you start your search gives you confidence and shows you're a serious buyer. Remember to also plan for one-time closing costs and shared monthly expenses.What is a Co-Ownership Deposit? When you think about buying a home, the first thing that often comes to mind is the down payment. A co-ownership deposit is simply the down payment you make when purchasing a share of a vacation home, rather than the entire property. It’s one of the key elements that makes owning a beautiful second home so much more accessible. Instead of needing a massive lump sum to cover a percentage of the home's total value, you only need to put down a deposit on the fraction you’re buying.
This approach breaks down a major financial barrier, allowing you to become a homeowner in a place you love without the financial strain of a traditional purchase. The deposit secures your share and is the first step toward making those vacation memories a reality. It’s calculated based on the price of your share, which could be anywhere from 1/8th to 1/13th of the home’s total value. This structure is designed to make the dream of owning a luxury vacation property a practical and achievable goal. You can learn more about how this co-ownership model works and find the right fit for your family.
How It's Different from a Traditional Deposit The biggest difference between a co-ownership deposit and a traditional one comes down to one simple thing: you’re only paying a deposit on the portion of the home you’re actually buying. With a traditional home purchase, your deposit is a percentage of the property's full market price. For a co-owned home, your deposit is a percentage of your share’s value.
Most lenders will ask for a deposit that’s between 5% and 10% of the share you are purchasing. This makes the upfront cost significantly smaller. It’s a more manageable entry point into property ownership, especially for a second home. This unique financing structure is what helps families enjoy the perks of a vacation home without tying up a huge amount of capital in a single asset.
The Advantage of a Smaller Down Payment The most obvious advantage of this model is that you need far less cash upfront. Let’s break it down with an example. Imagine a stunning mountain cabin valued at $1.6 million. A traditional 20% down payment would be $320,000. With co-ownership, if you were to buy a 1/8 share, your share’s value would be $200,000. A 10% deposit on that share is just $20,000. That’s a massive difference that puts luxury property listings within reach.
Of course, if you’re able to put down more than the minimum deposit, you’ll borrow less for your mortgage. This can lead to lower monthly payments, giving you more financial breathing room to actually enjoy your time at the property. It’s all about providing a flexible and sensible path to owning a vacation home.
How to Calculate Your Co-Ownership Deposit Figuring out the deposit for a co-owned vacation home is more straightforward than you might think. The best part? It’s significantly less than the down payment on a traditional home purchase. Because you’re buying a share of the property, not the whole thing, all the costs are proportional. This approach makes owning a beautiful vacation home much more accessible. Let's walk through exactly how to calculate your deposit so you can see what it might look like for your dream getaway.
Breaking Down the Deposit Percentage With shared ownership , your deposit is based only on the portion of the home you're buying, not the full property price. This is the key difference that makes the upfront cost so much smaller. Most lenders typically ask for a deposit that’s between 5% and 10% of the value of your share. So, instead of needing to save up 20% of a home's entire market value, you only need a small fraction of that. This structure is designed to lower the financial barrier, making it easier to start creating memories in a place you love without draining your savings.
How Your Share Size Affects Your Deposit The size of the share you purchase directly impacts your deposit amount—the smaller the share, the smaller the deposit. At Fraxioned, you can buy a share that fits your lifestyle, typically ranging from 1/8 to 1/13 of the home. Since you only pay a deposit on the share you buy, choosing a smaller fraction means your initial cash outlay will be lower. For example, the deposit for a 1/13 share will be less than the deposit for a 1/8 share of the same property. You can explore our current listings to see how different share sizes affect the overall cost and find the perfect fit for your family’s needs.
Let's Do the Math: A Quick Example Let’s put some numbers to it. Imagine a stunning vacation home valued at $1,200,000. If you were buying it outright, a 10% deposit would be a hefty $120,000.
Now, let’s look at it through the co-ownership model:
Home Value: $1,200,000Your Share: 1/8Value of Your Share: $1,200,000 ÷ 8 = $150,000Your deposit is calculated on that $150,000 share value, not the full home price. If your lender requires a 10% deposit, the calculation is simple:
Your Deposit: $150,000 x 10% = $15,000That’s a much more manageable number. This is how co-ownership makes luxury vacation homes a realistic goal, and our team can help you explore your financing options to get started.
What's a Typical Deposit for a Co-Owned Home? One of the first questions that comes to mind when buying property is, "How much do I need for a deposit?" With co-ownership, the answer is often a pleasant surprise. Because you're purchasing a share of the home, not the entire property, the deposit becomes much more manageable. Let's break down what you can typically expect when it comes to putting money down on your dream vacation home.
Standard Deposit Percentages The best part about a co-ownership deposit is that it’s calculated on the price of your share, not the total value of the home. This is a game-changer for affordability. Most lenders will ask for a deposit that’s between 5% and 10% of the share you’re buying.
For example, if you’re purchasing a 1/8 share of a $1 million home, your share price is $125,000. A 10% deposit on that share would be $12,500. That’s a world away from the $100,000 deposit you might need for a traditional purchase of the same home. This approach makes owning a piece of a luxury property a realistic goal. You can learn more about your options by exploring financing for your share .
What Lenders Look For Just like with any home loan, different lenders have their own specific requirements. When you apply for a mortgage on your share, they will look at your financial health to determine your eligibility and deposit amount. A key factor they consider is your credit score.
Having a strong credit history can help you secure a loan with a lower deposit requirement. On the other hand, a lower score might mean you need to put down a larger deposit. It’s always a good idea to check your credit report beforehand so you know where you stand. If you have questions about the process, our FAQ page is a great resource for answers about financing and more.
Clearing Up Common Deposit Myths Let’s clear up the biggest myth about co-ownership deposits right away: you do not need a deposit for the full price of the home. This is where people often get tripped up, but the reality is much simpler and more appealing. You are only responsible for the deposit on the portion of the home you are actually buying.
This is the fundamental advantage of the co-ownership model . It’s designed to break down the financial barriers that keep many people from owning a vacation home. By splitting the costs, you also split the initial barrier to entry—the deposit—making it possible to start creating memories in a beautiful home without the overwhelming financial burden of sole ownership.
What Other Costs Should You Plan For? Getting your deposit together is a huge milestone, but it’s not the final step in your budget. Like any home purchase, there are other costs to keep in mind. Planning for these expenses ahead of time ensures your co-ownership experience is smooth and stress-free, so you can focus on what really matters: making memories in your new vacation home.
Beyond the Deposit: Monthly Costs After buying your share, you’ll have monthly costs that are split among all co-owners. This is a major perk of co-ownership—you get a luxury home experience without shouldering all the expenses yourself. These shared costs cover everything needed to keep the home pristine, including property management, routine maintenance, utilities, and property taxes. If you finance your purchase, your mortgage payment will also be part of your budget. Fraxioned can connect you with partners who specialize in financing for co-ownership. These contributions are your ticket to hassle-free ownership.
One-Time Fees to Expect When you buy your share, there are a few one-time fees in the closing process. These are standard for any real estate transaction, but they’re scaled to your share size, making them more manageable. You’ll need to account for closing costs, which cover legal paperwork, title transfer, and other administrative items to ensure your ownership is properly recorded. These fees ensure everything is handled professionally and your ownership is secure. The Fraxioned team provides a clear breakdown so you know what to expect. Find more details on our FAQ page .
Planning for Ongoing Expenses Fraxioned’s model is built on simplicity. Instead of juggling bills for insurance or repairs, these expenses are rolled into shared monthly operating costs. This includes a reserve fund for future capital improvements, like a new roof or updated appliances, so you’re never caught off guard by a large, unexpected expense. It’s all about predictable, shared costs. The main ongoing expense to plan for is your travel. You can manage bookings and see a transparent breakdown of home expenses through the myFRAX Portal , making it easy to plan your stays without surprises.
What Influences Your Final Deposit Amount? When you start thinking about your deposit, it’s helpful to know that there isn’t one single answer for how much you’ll need. The final number depends on a few moving parts, from your personal financial picture to the specific home and share you have your eye on. Understanding these factors will help you plan your budget and move forward with confidence. Let’s walk through the three main things that shape your deposit amount.
Your Finances and Eligibility Your personal financial health plays a big role in what lenders will require for a deposit. A strong credit score, for instance, often signals to lenders that you're a reliable borrower, which can lead to a lower deposit requirement. On the other hand, a lower score might mean you’ll need to put down a bit more. It’s a standard part of the lending process, but it’s good to know where you stand. If you have questions about how your finances fit into the picture, exploring your financing options is a great next step.
The Home's Value and Location It makes sense that the total value of the home you want to co-own affects your deposit. A share in a more expensive property will naturally cost more, and your deposit will reflect that. The location of the home is a huge part of its value—a ski-in, ski-out cabin in a popular resort town will have a different price point than a more secluded retreat. As you browse different listings , keep in mind that the home's price is the starting point for calculating the cost of your share and, ultimately, your deposit.
The Share You Choose This is where the magic of co-ownership really comes into play. Your deposit is based only on the price of the share you’re buying, not the full value of the home. This is what makes the down payment so much more manageable than it would be with a traditional purchase. Most lenders look for a deposit that’s between 5% and 10% of your share’s value. By choosing a share size that fits your budget, you have direct control over how much you’ll need to save for a deposit. This flexible approach to co-ownership is designed to make vacation home ownership a realistic goal.
How to Get Ready for Your Deposit Saving for a deposit is often the biggest first step toward home ownership, and it’s no different with co-ownership. The great news is that the path to getting your keys is much more straightforward and attainable. Because you’re purchasing a share of the home, not the entire property, the amount you need to save is significantly less. With a clear plan, you can confidently prepare your finances and get ready to make your vacation home dream a reality. Let’s walk through the key steps to get your deposit ready.
Smart Saving Strategies With co-ownership, your deposit is only for the fraction of the home you're buying, which makes the goal much more manageable. Lenders typically look for a deposit between 5% and 10% of your share’s price. While meeting the minimum is a great start, aiming for a larger deposit can be a smart move. The more you put down, the less you’ll need to borrow. This often leads to lower monthly mortgage payments and can make your application look stronger to lenders.
To get started, consider opening a dedicated high-yield savings account for your deposit. This keeps the money separate from your everyday funds, making it easier to track your progress and resist the temptation to dip into it. Setting up automatic transfers can also put your savings on autopilot, helping you reach your goal faster.
Secure Your Financing First Before you fall in love with a specific property, it’s wise to get a clear picture of your finances. You’ll go through an affordability check where your income, regular expenses, and savings are reviewed. This ensures you can comfortably handle the monthly costs, including your mortgage payment and shared operating expenses, without stretching your budget too thin. Understanding your financial standing early on helps you search for homes within a comfortable price range.
Your deposit is the cash you’ll contribute upfront, and a mortgage will cover the rest of your share’s cost. We highly recommend exploring your financing options and getting pre-qualified for a loan. This shows you’re a serious buyer and gives you the confidence to move forward when you find the perfect vacation home.
Partnering with the Right Experts You don’t have to go through the buying process alone. Assembling a small team of trusted professionals will make everything smoother and give you peace of mind. First, you’ll want a real estate attorney to review all the legal documents, including the co-ownership agreement and your mortgage offer. They’ll make sure you understand every detail before you sign.
It’s also helpful to work with a mortgage broker or lender who has experience with fractional ownership. They can help you find the right loan product for your situation. Many professionals offer a free initial consultation, so you can ask questions and find experts you feel comfortable working with. This team will help you handle the details, so you can focus on the excitement of owning your new vacation home.
Related Articles Can I just pay for my share in cash instead of getting a mortgage? Absolutely. If you're in a position to pay for your share in full with cash, you can bypass the mortgage process entirely. This simplifies the purchase, as you won't need to think about a deposit or monthly loan payments. You would still be responsible for your portion of the monthly operating costs that cover the home's upkeep, but you'd own your share outright from day one.
What's the difference between my deposit and the monthly operating costs? Think of the deposit as your one-time entry ticket to ownership. It's the down payment you make on your share of the property. The monthly operating costs, on the other hand, are the ongoing, shared expenses required to keep the home running beautifully for everyone. These costs cover things like property management, maintenance, utilities, and taxes, and are split proportionally among all the owners.
Is the 5-10% deposit requirement a strict rule? The 5% to 10% range is a common guideline that most lenders use, but it isn't set in stone. The final percentage can depend on your personal financial situation and the specific lender you work with. A stronger credit history might help you secure a loan with a deposit on the lower end of that range, while other factors could shift it slightly. It's always best to speak with a financing partner to understand the specific requirements for your situation.
What happens to my deposit money after I pay it? Your deposit is handled with the same care as in any traditional real estate transaction. Once you pay it, the funds are held securely in a third-party escrow account. This means your money is protected and isn't released until all the conditions of the sale are met and you officially close on your share. It’s a standard process designed to safeguard both the buyer and the seller.
Besides my deposit, what are the biggest one-time costs I should prepare for? The main one-time costs you should plan for are the closing costs. Just like with any property purchase, these fees cover the administrative and legal work needed to finalize the sale, such as title transfer and legal paperwork. The good news is that because you're buying a share, these costs are proportional to your purchase price, making them much more manageable than in a traditional home sale. We provide a clear breakdown so there are no surprises.
