Can you use some of your FHA home loan to pay some personal bills, like a car payment?
I'm looking to buy a home for the first time. My buddy at work told me you can add more money to your home loan when u purchase your house and the extra money you borrowed you can use to pay your car payment or use to fix the house up. Is this possible using a fha home loan? Example: House= 60,000 Then borrow 75,000 and use the extra 15,000 for home repairs or any unexpected bills.
- DebdebLv 71 decade agoFavorite Answer
No. You can borrow a certain percentage of the purchase price, but not more than the purchase price. Lenders will give you a percentage of the purchase price or the appraised value, whichever is less. If you buy a house for $100k, and the appraisal comes in at $110k, you won't get more money. Conversely if you buy a house for $100k and the appraiser says $90k, you'll be getting less money than you thought.
Some lenders used to do what you describe, called it a purchase plus loan, but I don't know any lender who does it now, and certainly not the FHA. There may be some kind of loan to do repairs, but it would probably be a second from a local group or municipality.
You have to have some cash to close, and you can see if the seller will pay some of the closing expenses.
- freakyallweekyLv 51 decade ago
I have an FHA home loan and I did not have 3.5% down like a few other people have said. I have 0% down and was approved but you cannot make the loan for more than the value of the house you are purchasing. So If you were approved for 150,000 and the house is appraised at 145,000 you don't get to keep that extra 5,000 either. There is a way that you can get cash back at the end of closing but you have to work that out with the seller. Lets say your approved for 150,000 and the house is selling for 120,000 and you need some cash back, then if the house will appraise for 125,000 you can ask the seller if they will accept an offer of 125,000 and give you the 5,000 back at closing.
- 1 decade ago
Your buddy is pulling your leg.
You cannot borrower more than the purchase price to pay for things like car payments, but you can borrow more to do improvements as long as the appraised value supports those improvements being done.
For FHA, you will need to have 3.5% of the purchase price for the down payment and the money for prepaids and closing costs or negotiate with the seller to contribute towards those. If you are going to make improvements you will need to submit those bids to your mortgage lender for approval of the escrow holdback.Source(s): In the mortgage business.
- ayanaLv 44 years ago
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- David ZLv 71 decade ago
You cannot doing what you described but you can accomplish it to a lesser degree. There is a way to set this up so you do not have use all your funds for prepaids and closing. You always have to bring 3.5% of purchase price as cash. That is your minimum downpayment.
In your example you could structure offer as follows:
Purchase price $63,800
Seller agrees to pay $3,800 of your prepaids and closing.(6% max)
The seller can pay up to 6% of purchase price towards your costs (not including your downpayment).
- Beverly SLv 71 decade ago
Your buddy is wrong! You have to put in 3.5% down payment. FHA will not finance more than 96.5% of the purchase price.Source(s): 23 years in the mortgage business. I do FHA loans everyday.
- JaneLv 71 decade ago
I wouldn't think so. You take out the loan for the purchase of the house, they make the payment for the house (you don't get a big fat check to deposit then buy what you want) then you pay back what was paid out on the house. You can get subsequent loans to fix up the house later.
- Leo FLv 51 decade ago
Sorry no lender will lend on a Mtg home loan more the the value of the home or the purchase price. This is FACT.Source(s): Certified FHA Appraiser
- Anonymous1 decade ago
100% sure that you can't.
Plus with FHA you must have 3.5% of YOUR OWN MONEY