Yes, you can use certain types of borrowed funds for a down payment. The acceptable forms of borrowed down payments are:
Unacceptable loans include:
- 401K loans. I personally like the idea of a 401k loan because you are paying yourself back, and you can pay yourself back in a short amount of time. My advise to my customers who are contemplating a 401K loan is to get with the 401k plan adviser and their CPA to map out a plan of to pay themselves back in addition to making sure they understand the tax ramifications.
- Loans from secured real estate. You can borrower money from other real estate you own. The terms of the loan need to be documented and you will need to qualify with the new payment.
- Stocks,bonds, CDs, life insurance policies, retirement accounts. Again, I suggest to get with a financial planner and CPA to make sure you understand the ramifications involved in borrowing against your collateral.
Unacceptable loans include:
- Debt from credit cards
- Loans from family members
- Real Estate Agent
- Seller
- Any party invested in the transaction