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304 North Cardinal St.
Dorchester Center, MA 02124
For many prospective home buyers, coming up with a down payment can be one of the biggest obstacles to home ownership. A typical down payment on a home is around 3-20% of the purchase price. With rising home prices in many markets, this can equate to tens of thousands of dollars that buyers need to have on hand before they can qualify for a mortgage.
Some buyers consider putting that down payment on a credit card as a way to access funds quickly without having to save up for years.
Yes, you can technically use a credit card for a down payment on a house. However, this method is not typically favored by mortgage lenders due to the high risk associated with it. Lenders may require additional documentation or even decline your loan application if you choose to use a credit card for your down payment.
There are several pros, cons, and alternatives to think through before swiping that card for your down payment.
Technically, yes you can use a credit card to pay for a home down payment. The funds from a credit card can be used like any other source of funds for your down payment.
However, using credit card funds does not mean that those funds will be considered an acceptable source by all mortgage lenders. Some may consider it higher risk and require additional documentation or decline your loan application if you put the down payment on a credit card.
The biggest advantage of putting your down payment on a credit card is accessing funds quickly without having to save up for an extended period. Other potential benefits include:
For buyers who only need a small amount for their down payment, these benefits may make credit cards an appealing option.
However, there are also significant risks and downsides to keep in mind when using credit cards for a home down payment:
For most buyers, the risks outweigh potential rewards of using credit cards.
If you do opt to charge your down payment, be prepared for much more scrutiny during the mortgage application process. The lender will want to see details on how and when you plan to repay this new debt quickly:
Even with documentation, some lenders may deny your loan application altogether if they see too much new credit card debt before closing. Be transparent with your loan officer to understand potential impacts.
If you’ve determined that a credit card is your best source of down payment funds, look for ones that offer intro 0% APR periods so you can float the balance interest-free. Products like the Chase Slate or Citi Simplicity card offer 0% for 12-21 months on purchases and balance transfers.
Alternatively, some credit card companies like SoFi offer special credit card loans specifically designed for down payments. These function like personal loans but allow you to draw funds directly to your card. Qualification and terms vary.
To qualify for a down payment loan from a credit card issuer, requirements typically include:
Even if you qualify, interest rates on these products tend to be higher than alternatives like personal loans or retirement account loans. Shop around for the best fit.
At minimum, you’ll need the following to use credit cards for a home down payment:
Work closely with your loan officer to understand your lender’s specific policies on credit card down payments. Their requirements may be more stringent.
The best credit cards for down payments include:
Focus on cards with 0% promotional financing periods to avoid interest. Rewards cards can help offset some costs too.
Given the risks and limitations of credit card financing, you’re often better off exploring other down payment funding sources:
Using a credit card for your home down payment may seem like an easy shortcut to homeownership. But in most cases, the risks and limitations make alternative options like saving, borrowing from retirement, gifts, or down payment assistance programs better approaches. If you do use a credit card, have a rock-solid repayment plan and be prepared for extra scrutiny from lenders. With smart planning and disciplined saving, you can reach your down payment goal and get approved for the mortgage you need.
No, PennyMac does not accept credit card payments for mortgages. This is due to the high transaction fees and risk of swapping low-interest debt for high-interest debt. However, third-party payment services like Plastiq can be used as a workaround, but they charge a transaction fee and have restrictions on the type of cards accepted.
No, Chase does not allow mortgage payments to be made directly with a credit card. However, it is possible to indirectly use a credit card by withdrawing cash or using a cash advance, depositing this into another bank account, and then transferring the funds to pay the mortgage. This method may incur additional fees and interest charges.
No, you cannot directly pay your mortgage with a Capital One credit card as most mortgage lenders do not accept credit card payments. However, an indirect method is available through third-party payment services like Plastiq, which charges a processing fee of around 2.5% for facilitating the transaction between your Capital One card and your mortgage lender.
No, Wells Fargo does not allow customers to directly pay their mortgage with a credit card. However, it is possible to indirectly use a credit card by transferring funds from the card to a checking or savings account, then using that account for the mortgage payment. This method may involve additional fees and potential impacts on your credit score.
No, you cannot directly pay your mortgage with an American Express credit card. American Express’s cardmember agreement prohibits such transactions, categorizing them as cash advances ineligible for rewards or cash back. Some third-party processors may facilitate this, but they involve high fees and immediate interest charges that typically outweigh any potential benefits or rewards.
Yes, closing costs can be put on a credit card if the mortgage lender and title company permit it. However, this method may involve convenience fees and could lead to high interest charges if not paid off promptly. This approach can earn rewards or provide short-term financing but may negatively impact your credit score and accumulate debt.