If you are struggling to finance your first house, using an alternate payment method to raise the necessary funds, like using a credit card for a down payment on a house might sound like a great option. Many people don’t have enough money in savings to pay the complete down payment, making other methods critical for first-time home buyers.
Can You Put The Down Payment For A House On A Credit Card?
If you need more capital in your savings account, have a low credit score, or cannot afford the specific down payment, you might wonder if a high credit limit is suitable to put the down payment for a house on a credit card.
Unfortunately, no mortgage lender allows potential home buyers to use their credit cards for the down payment. There are hefty merchant transaction fees for any purchase with a credit card, usually hovering around 2-4% based on the company. For example, if a homeowner needs to pay $40,000 for a down payment, the lender would miss out on $1,200.
Furthermore, the purpose of a down payment is to prove to the bank that the future homeowner currently has the capital required to purchase the house. Lenders want proof that the homeowner won’t spend outside of their means and go too far into debt, as they need to be paid back in installments by the borrower.
What Can I Use as a Down Payment On a House in Louisiana?
Since you can’t use your credit card as a down payment for a property in Louisiana, you might be thinking – what now? Fortunately, there are other options you can use to help finance your first house.
First-Time Home Buyer Loans
One of the best options for home buyers in Louisiana is to use a first-time home buyer loan that provides money for your down payment:
- FHA loan: 3.5% down payment (minimum) and >580 credit score
- Conventional 97: 3% down payment, >620 FICO score
- VA loan: veterans and service members; zero down payment, >620 credit score
- USDA loan: low-to-moderate income; zero down payment, >640 credit score
- Louisiana Housing Corporation: mortgage credit certificates and down payment assistance
First-Time Home Buyer Programs
Instead of just securing a loan for your down payment, you can sign up for a program that offers state-wide assistance to first-time buyers within the state. These are typically only applicable to those on low or moderate income levels.
- LHC Mortgage Revenue Bond: Fixed-rate loans with optional second mortgages; >640 credit score, household income <80% of the area median income
- LHC Market Rate Conventional: 30-year fixed rate and discounted mortgage insurance
- LHC Market Rate GNMA: provides a VA, USDA, or FHA loan with a fixed rate for 30 years and 4% down payment aid.
- LHC Delta 100: 2% interest rates, no mortgage insurance, and upwards of 3% in down payment aid.
Can You Use a Credit Card for Down Payment on a House? No, But We Can Help
Home Helpers Properties provides you with the necessary tools and education to get your first home. Although 90% of our clients were turned down elsewhere, we were able to provide them with a home.
Even though you can’t put the down payment for a house on a credit card, we have other solutions that can suit your budget. Contact us today to figure out how to finance your first property in Louisiana!