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Ask the Underwriter: Can I pay mortgage closing costs with a credit card?


 


I'm making it easier for everyone to understand how the mortgage process works! As part of my brand new "Ask the Underwriter" feature, I'll be posting your questions and my answers each week. Want to see your question featured? Submit a question in the comments section of this post, tweet at us, or post on Reddit.


Are you buying or refinancing your home and are wondering about your options when it comes to paying for the closing costs? Check out this week’s Q&A for more info about using your credit card to pay for closing costs.

Question:

Can I pay mortgage closing costs with a credit card?

 

Answer:

Fannie Mae permits certain costs that must be paid early in the application process, such as lock-in fees, origination fees, commitment fees, credit report fees, and appraisal fees, to be charged to the borrower’s credit card because these fees do not represent extraordinary amounts and the credit card debt is considered in the borrower’s total monthly debt-to-income ratio. Borrowers are not required to pay off these credit card changes before closing. *Under no circumstances may credit card financing be used for the down payment.

Lenders may allow credit card financing for the payment of common and customary fees paid outside of closing up to a maximum of 2% of the loan amount if the lender:

Confirms that the borrower has sufficient liquid funds (financial reserves) to cover these charges (in addition to funds needed for other closing costs and the down payment that he or she will be paying); or
Recalculates the credit card payment, per B3-6-05, Monthly Debt Obligations, to account for the new charges and includes the updated payment in the qualifying ratio calculation.

So, the answer is yes, as long as you have assets to cover the amount you put on the credit card or have a low enough Debt to Income Ratio, so that adding a higher payment based on the new balance of the credit card won’t put you over the 50% max threshold.

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Did this help? Find more answers to underwriting questions here.

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