Do Personal Loans Affect Mortgage Applications?
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
What Is a Personal Loan?
Can a Personal Loan Affect Your Chances of Getting a Mortgage?
Your Debt-to-Income Ratio
How You’ve Managed Your Debt
Moves You Can Make to Improve Your Chances
Is It Possible to Use a Personal Loan as a Down Payment?
Pros and Cons of Using a Personal Loan as a Down Payment
Pros
There may be less stress about saving up for a big down payment. Not worrying about where your down payment funds will come from can make the home buying process a bit easier. You won’t have to tap into your savings account or your retirement fund to get the money for a down payment.
Cons
Some lenders may not allow borrowers to use personal loans for a mortgage down payment. And those who do may still turn down your application if they see it as a sign that you aren’t ready to make such a big purchase. Your mortgage options may be limited to lenders who are OK with your borrowing the down payment. You’ll have two payments — personal loan and mortgage — to worry about after you close on your new home.
Other Mortgage Options
FHA Loans
VA Loans
USDA Loans
Conventional Loans
Alternative Lenders
Other Options for Financing a Down Payment
DPA Programs
Keep Saving
Piggyback Loan
Retirement Fund Loan
Gifts from Family Members or Close Friends
The Takeaway
About the Author
Kim Franke-Folstad is an award-winning journalist with 30 years of experience writing and editing for newspapers, magazines and websites. Her work for SoFi covers a range of topics related to personal finance, including budgeting, saving, borrowing, and investing.
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