A home-buyer’s down payment may come from many sources. In fact, knowing these options may help buyers find ways to fund a down payment on a new home purchase
Allowable Down Payment Sources
While checking and savings accounts are great sources for down payment funds, home-buyers can obtain funds from a number of places besides these basic asset accounts. For example, acceptable sources include:
Checking, Savings and Money Market Accounts
One common source of down payment funds are basic bank accounts. However, large cash deposits, transfers and/or other unidentified deposits are subject to further underwriting review.
Retirement Accounts (401k, IRA and others)
Retirement accounts such as 401k’s and IRA’s may be used to fund a home purchase down payment. However, retirement accounts may have their own limits regarding what the buyer may use the funds for. Check with your financial advisor for more.
Gift funds from family members and in some cases employers provide an acceptable down payment source. However, certain loan programs and/or scenarios (such as rental property purchases) do not. Consult with the HOUSE Team for more.
Brokerage, Stocks & Bonds
Stock, bond and mutual fund accounts are a great option for the down payment on a home purchase. However, please confirm access to and the costs associated with accessing these funds. Check with your financial advisor for more.
Auto Title Loan
Auto title loan proceeds can be used for down payment funds on a home. However, additional requirements exist. Consult with the HOUSE team for more.
Sale of Personal Asset (car, horse or other asset)
While not the easiest to document, assets from the sale of an asset such as a car or even a farm animal may be used for down payment funds on a home purchase. However, additional requirements exist. Consult with the HOUSE team for more.
Home Equity Line of Credit (HELOC)
Secured HELOC’s are acceptable sources of down payment funds. However, unsecured revolving lines (personal lines of credit and credit cards) are not acceptable. The HELOC’s monthly payment is factored into the debt to income ratio on the new home purchase loan application.
Current homeowner’s tap equity in their present home using a bridge loan. Bridge loan proceeds are an acceptable source of down payment funds for a home purchase. The bridge loan’s monthly payment is factored into the debt to income ratio on the new home purchase loan application.