Common Funding Sources for a Down Payment

If you're using conventional financing to obtain a down payment be careful to utilize only funds that can be accepted for your particular scenario. Here are some tips on the most common types of funding for down payments that I've seen:

- Checking & savings accounts can be used as long as all deposits can be documented

- can only use gift funds if you're purchasing a primary or 2nd home

- funds must be from documented source no undocumented cash or cash from sale of goods that cannot be documented to be owned by you prior to the sale that resulted in the "cash." Real life example: "selling gold but not being able to prove the gold was yours in the first place."

- If you borrow against a financial asset like a loan against your CD/savings, loan against your stock/bond portfolio, loan against your 401k, or cash value life insurance policy loan the payment due each month is not calculated against your debt to income ratios (with conventional financing) which is important if your ratios are tight in the 45-50% range

- if you obtain a loan from a real/tangible asset like real estate or your business entity the "net," payment will be counted towards your debt to income ratios but may have offsetting factors if the asset has income to offset the loss incurred from borrowing

- you cannot use a cash advance against an unsecured source like personal lines of credit for down payment

- you can only use business funds for down payment and closing costs in limited scenarios where use of the funds will not be detrimental to the ongoing operation of your business (based on underwriter's interpretation of your financials).

- and more....

The above are just some general guidelines on funds for a down payment and there are exceptions and creative options that are still acceptable depending on your particular situation.

If you'd like more information on this topic feel free to PM me.