If you go bankrupt, can you borrow a down payment for a house using a co-signer?
I didn't have enough money for a down payment so they told me to go get a "gift" from a relative, instead I went to a different bank and got a loan and used that as a down payment. My brother went bankrupt a few years ago and they told him he needed 20% down in order to buy a house. Couldn't he just do what I did with a co-signer for the down payment loan?
- Lisa LLv 61 decade agoFavorite Answer
You actually can borrow the money for a down payment on an FHA loan. It must be a secured loan or a loan from a family member. A payment on the loan will be charged in your ratios. Your brother may be able to get an FHA loan with only 3.5% down payment IF it has been 2 years since discharge, he has re-established good credit & there was no foreclosure in the BR & he qualifies with his income.
Many first time home buyers are getting a loan from parents for the down payment then promising to repay them when they get the tax credit currently being offered.Source(s): LO who has helped hundreds of people get homes.
- ClaudiaLv 44 years ago
you can borrow from a 401K for a home. You still have to pay back the 401k but in some cases you can use it with out the pay back. its been awhile since I have done this and the rules may have changed. Check with your employer and see what the rules are. Human resorces is the place to start. Thats who administers the plan in most companies. If you are no longer empoyeed there, thats still the place to go as they are still the ones administering the plan. You must meet the rule of th 401k and the rules of who ever is the administrator. So the answer is YES. Good luck on your new home. By the way they do not hit you hard for the withdrawl fees on a home. IF you are just pulling money out to go play, its going to cost you. For a home however they do make exceptions. Back when I studied this stuff a home and college tuition were exceptions. Its been a while and congress may have changed things. But I bet you can still use it for a home. Congress doesn't dare mess with that.
- curtisports2Lv 71 decade ago
When you apply for a mortgage, you sign the application form. Somewhere in all that paperwork, you are asked if any part of the money you are using is borrowed. It doesn't matter if you're a co-borrower and found someone (sucker) to take the risk along with you. It's borrowed money, and if you sign papers denying it, you are committing fraud.
- Anna ELv 71 decade ago
Actually, I don't think it's legal to "borrow" money for a down payment on a house. That is why the first bank told you to get a "gift" from someone.
- How do you think about the answers? You can sign in to vote the answer.
- 1 decade ago
I have been processing mortgages for years.Normally,the lenders will document that the gift funds weren't borrowed.I am really surprised that you got away with doing that.With the mortgage market being what it is right now,it's difficult for even people with good credit to get a mortgage much less with a recent bankruptcy.I don't think he will be able to do that.
- 1 decade ago