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Mortgage Guide

How to get a home loan

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


When you're buying a home, there is always a huge focus on the down payment. Many times, homebuyers forget they may also need cash on had to cover the closing costs. An extremely common question we hear regards if your credit card can cover the extra money needed.


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.

Have more questions?

Feel free to use the comment section below or the chat on the right hand side of your screen. If you're still early in your home purchase, you can download our completely free guide for first-time home buyers. You'll learn how to avoid common mistakes and close 3x faster than the industry average.

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