How Personal Loans Can Affect Mortgages
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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
3 Steps to Take to Increase Your Chances of Getting a Mortgage
1. Check Your Credit Report
2. Strengthen Your Credit
3. Use the Same Lender
Is It Possible to Use a Personal Loan as a Down Payment?
Why Don’t Some Lenders Accept Personal Loans for Down Payments?
Pros and Cons of Using a Personal Loan as a Down Payment
Pros of Using a Personal Loan as Down Payment
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. And you can compare personal loans to find the best rates and terms you can qualify for.
Cons of Using a Personal Loan as Down Payment
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
5 Other Options for Financing a Down Payment
1. DPA Programs
2. Keep Saving
3. Piggyback Loan
4. Retirement Fund Loan
5. Gifts from Family Members or Close Friends
Risks of Jumping Into a Mortgage Too Soon
Viewing Personal Loan Rates With Lantern
Frequently Asked Questions
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