How to Apply for a Loan for a Home Down Payment
You may be able to easily afford the monthly mortgage payment on a new home, but that does not mean that you can afford to purchase the house. Most lenders will require you to put a down payment toward your purchase. The down payment requested will vary depending on your lender and the type of mortgage loan you have been approved for. If you are not financially capable of making a down payment on a new home, you may be able to take out an additional loan to cover the upfront costs of the mortgage.
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Instructions
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Check with your mortgage lender to make sure that taking out an additional loan will not affect your current approval status. When deciding whether to approve you for a mortgage, your lender takes your current debts into consideration. If you have too much debt, your application may be turned down. Taking out an additional loan to make a down payment on the property you wish to purchase could leave you with too much debt to still qualify for the initial mortgage loan.
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Ask your loan officer if your mortgage lender offers an 80/20 loan program. With an 80/20 loan, your mortgage consists of two separate loans: a 20 percent loan to cover the down payment on the property, and a mortgage loan to cover the remaining 80 percent of the purchase price. This allows you to purchase a home even if you do not have the funds to cover the down payment.
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Visit the banks and credit unions in your area to find the lender that will offer you the best rates on a personal loan. The personal loan can then be used for your mortgage down payment.
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Calculate the additional monthly costs you will incur by taking out a loan for your down payment. Even if taking out a personal loan to use as a down payment does not affect your approval status with your mortgage lender, it may prove to be too much of a financial strain to comfortably manage.
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Fill out the loan application and provide the necessary documentation. Even if you have been pre-qualified for the loan, this simply means that the lender has reviewed your financial information and believes you would be a good candidate for a loan. It is not a guarantee of approval. You must fill out a formal application and be approved before you are guaranteed to receive the funds.
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Tips & Warnings
Consider liquidating assets, such as retirement funds or investment accounts, to make your down payment rather than taking out a loan.
Taking on additional debt may affect the interest rate you are required to pay on your mortgage.
