Can You Use a Credit Card for Down Payment?

Credit card

There are many ways you can buy a house without having to shell out money from your own pocket for the down payment. There’s the cash gift from families and friends. There’s also what we call down payment assistance loans and grants. Then, there’s the 100 percent financing loan.

But there’s one very rare option to pay for your mortgage down payment. It comes as a shiny piece of metallic plastic card — your credit card.

It is so rarely used that you might not have heard that such a thing is possible. putting your brunch bill or a signature handbag on a credit card can be pretty easy. However, using it to pay the down payment on a house is just absurd.

But now that we’ve started talking about it, it leaves us to question — is it actually possible?

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Technically speaking, yes, it can be done. If your credit card’s credit limit is high enough and your down payment is low enough, it is doable. You can even buy the whole property of a credit card if the house’s price is cheap enough to fit your credit limit.

To do this, you need a credit card that allows you to get a cash advance.

While it is possible, most lenders won’t consent to such strategy for the basic reason that you are paying a debt with another debt. take FHA for example, it is a red flag if you use a credit card to pay for the home’s down payment. an FHA lender wants to make sure that you are taking a mortgage you can afford. If you’re using a credit card to cover the down payment, this can be a warning sign that the loan is too expensive for you.

If you want to take your chances on using a credit card to pay for the down payment, the choice is yours. You can try shopping for a lender who is will to take the risk. However, this lender can be very difficult to find.

But if you want to take a safer route, consider these other options.

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Down payment assistance

DPA programs can come in the form of loans, grants. Loans can be interest-free and can be repaid once the first mortgage is completely repaid. DPA grants are simply “no strings attached” funds. You are not required to pay it back. in other words, it is free money.


Maybe you have family members or close friends who are eager to help. They can give you money to cover a part or the full down payment. Just make sure you can furnish a written proof that it is a gift and not a loan for lenders to consider it as down payment.

Retirement Savings Plans

It is possible to borrow from your 401(k) saving plan. We know that these funds are set aside for retirement. But if it can help you with homeownership, why not take advantage of it?

There are ways to pay the money back so you will still have enough when you hit the golden age. Think of it as borrowing from your future self.

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These are many ways to put a credit card into good use. However, using it on down payment isn’t one of the wisest options. If you want to learn more about other alternative sources of down payment, talk to a lender about it.

There are better ways to fund your down payment than by using a credit card. But if you really want to afford the down payment, you can begin by saving money today.

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