After utilizing a comprehensive mortgage calculator it appears I need a down payment of $17,500.00. Can I get that money from anywhere I can get my hands on it as long as it is legal?

Borrowed funds that are not borrowed against some form of existing equity or savings of the borrower are unacceptable sources.  Cash advances, loans from family members or personal loans would all be disallowed as sources for the down payment.  Cash on hand which is sometimes referred to as mattress money is also a problem.  If the source of down payment funds can not be identified or sourced as income or savings it will most likely not be allowed.  FHA allows certain provisions for cash accumulation if it is well documented and considered customary for the borrower, but this is an exception.  Sweat equity is not allowed.  Gifts from the seller are not allowed.  The down payment is expected to be saved funds.  If the saved funds are equity extracted from other assets of the borrower that will still be considered a form of saved funds since the borrower had in fact built up the asset used as security for a loan in the first place.  All other down payment sources will be questionable.  As always, apply the mortgage calculators to determine exactly what down payment level you are at and what down payment amount is needed to qualify.

This entry was posted on Thursday, December 11th, 2008 at 7:05 am and is filed under Mortgage FAQs. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.