Are you looking to buy the home of your dreams but you aren’t sure how to come up with a down payment? Generating the money for a down payment and paying closing costs can be one of the biggest obstacles a borrower faces in the home buying process. Now that tax season is here, consider turning your tax refund into a down payment, or to cover closings costs when you buy your new home.
Down payments are required to come from “Source and Seasoned” funds. Sourcing is being able to identify where the money came from, and Seasoning means the money has been in the bank for a certain period of time. A tax refund would be covered under the Sourced category. All you need to provide is a copy of the treasury check and a bank receipt showing the deposit is an acceptable source of outfunds.
Home loan options you can apply your refund towards:
- FHA, VA, Conventional, & USDA Loans: Perfect credit is not required, some loan programs go down to a 580 score.
- Down Payment: A sizable return may be enough to get you into an FHA loan, which requires a down payment of as little as 3.5% of the purchase price.
- Closing Costs: You can use the refund as money to help you cover any out of pocket closing costs or expenses that may occur.
- Buying down your interest rate: When using your refund to buy down your interest rate you can save a great deal of money in the amount of interest accrued over the life of the loan.
If you have any questions regarding using your tax return for a down payment or to cover closing costs when you purchase a new home, please click here to contact a licensed Mortgage Loan Originator.
*NFM Lending is not a Financial Adviser or Tax Consultant. Please make sure to consult your own Financial Adviser or Tax Consultant regarding the use of your personal tax refund.