Financing for new home

4 Replies

I am wondering if there is a way of having an investor pay for downpayment of a home, and then accept a term of being paid back in about 10 years with one lump payment. I would like to borrow 100k and then in 10 years give a one time lump sum payment of say 110k or something like that. The reason I say 10 years is I will be able to withdraw retirement money then without penalties attached. Is this funding even available anywhere?

Your question is really clear as you said was a down payment, no, you can't borrow the down payment in customary conventional financing, there are exceptions but sounds like you're not a first time buyer or low income or at the other extreme.

Sounds like you want an investor to buy a house a sell it to you in ten years, could be an option. Might look to family arrangements.

10K won't buy 100K for ten years, investors will want 10K a year, your offer, if I got that right, is paying 1% a year.

Devise a more specific arrangement and someone may jump in. :)

As @Bill Gulley  points out, 10% in interest after 10 years isn't going to fly with anyone.  That's far below what any bank will accept for a loan, and private lenders typically want higher rates than banks.  A lender will get more than you're offering for just putting the money into a bank CD and have ZERO risk.

A private lender might be willing to make a loan at a 10% annual rate.  Its unlikely you'll find anyone willing to wait 10 years before getting any payments, but if you did they would want the interest to compound.  10% interest on a loan of $100K with monthly compounding would result in a total of $270,000 being owed at the end of 10 years.

Further, you're wanting to borrow for a residence.  That makes this loan much more highly regulated than personal loans.  Many lenders who might lender for a rental or a fix and flip have no interest in making loans on residences at all because of this regulation.  And a $100K personal loan with no collateral and no payments for 10 years just isn't going to happen.

The real problem here is with the first mortgage lender.  They will ask you if any of the down payment is borrowed.  If you say "no", you're lying on a document you have signed and that's mortgage fraud.  If you say "yes", they won't make the loan.

If you're determined to go this way, just pay the penalties and withdraw the money from your retirement account.   The penalty is 10% of the amount withdrawn.  That works out to perhaps 15% of the amount you need to put up for a down payment.  That's almost certainly cheaper than any loan.

Good point Jon, suffer a little or suffer a lot? There is no issue with taking money out of your retirement account for a down payment as far as the lender is considered, it's not borrowed funds. You can also borrow with restriction from your account, that will have loan underwriting consequences but not like borrowed funds from any other source and that is also acceptable. Your money is the cheapest money you can get, pretty sure. :)

thank you John and Bill for the comments and advice.

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