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.
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646
