Can I use the deposits on my loft to fund the 3 1/2% down on an FHA loan?

Asked by warrengsanford, Sacramento, CA Wed May 29, 2013

I'm in a really expensive living situation and it's making it difficult to save...I have a couple grand locked in deposits on my rented loft-how can that be used to partially fund a down payment on a modest house? Is there an instrument to delay the down payment a week or two?

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Mike Fowler, , Roseville, CA
Fri Jun 7, 2013
As a lender, we need to verify and track where your funds to close are coming from. In order to use the deposit towards your down payment requirement we will need a signed copy of the rental agreement showing the deposit. Also, the landlord must release the deposit to you prior to closing escrow on your new home.

Call or email me with additional questions.

Mike Fowler, Mortgage Planner
916-519-8422, cell
916-782-9494, office
1 vote
Curly Sue, , Texas
Wed May 29, 2013
No. You'll need to come to closing with your funds.
0 votes
Eddie Martini, Agent, Auburn, WA
Wed May 29, 2013
As I understand it FHA requires 3.5% into the transaction of the buyers personal funds. You would do what you can to leave on great terms with your landlord in hopes of receiving all or most of your deposit back. Once it is in your possession then yes you would be able to use that to qualify towards the 3.5% total you will need into your new purchase.
I have several lender contacts that would love to help further answer your questions let me know if you need any further input so i can get you in contact.
0 votes
Jamie Collins, Agent, Fair Oaks, CA
Wed May 29, 2013
One of the only ways to do that is to move out a little earlier then your closing is. Talk to your landlord expain the situation and see if they can quickly return you deposit. Yes, it could be a big inconveince but you would have the funds.

It sounds like you are going for an FHA loan. If you have a relative you could ask them to loan you or gift you the funds needed.

Good Luck,

Jamie Collins
J.E. Collins Insurance Agency
Home-Auto-Umbrella & Toys
Over 23 years of experience
in Real Estate Services
Sales / Insurance / Mortgage Training
916-257-3779 direct
877-810-2763 fax
Dept. of Insurance # 0H71400
Dept. Real Estate # 0104820
0 votes
Jim Walker, Agent, Carmichael, CA
Wed May 29, 2013
Nope, The down payment must be provided at least the day before the close of escrow unless it is wired.
At best you may be able to assert that the $2K in the deposit is good for your after close reserves.
However are you really assured that you will get the deposit back?. Landlord, may make reasonable deductions for damages, unpaid utilities, or even unpaid rent.
0 votes
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