We had a borrower last week who was getting a gift of $40,000 to buy a home with FHA financing. FHA of course required a much smaller down payment but the borrower wanted to qualify for a higher purchase price by putting down more than what was required.
The borrower, however, also had a $15,000 car loan with a $500 payment. By paying off the car loan (or paying it down to 10 remaining payments), the borrower qualified for almost $100,000 more in purchase price.
This is why we often encourage borrowers to pay off consumer debt with available cash, and then pursue financing options with smaller down payments.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646