Using a "roth loan" for down payment on conventional loan?

5 Replies

My plan is to use my roth for the down payment on a conventional loan, then replenish the roth loan with unseasoned cash well after closing (from investors or bitcoin liquidation). Will the lender have any issues with this?

And for the unfamiliar, a "roth loan" isn't actually a loan, it's just a provision that lets you withdraw any roth money penalty-free, provided you return it within 60 days.  I'm not talking about the first time homebuyer option that gives you up to $10k.

@Reese W. I have done a loan on my 401k many of times.. the way my lender told is okay if you pull from 401k/Roth because the bank consider it your liquid money.  

@Reese W. this is completely allowable by most loan standards.  The lender will ask for the payment on the loan, to make sure you can "afford" that payment in your "debt-to-income" calculation.  Other than that, it's a pretty common practice.

@Reese W. one of my brothers just let me know that both Fannie and Freddie don't require even the debt payment to be held against you either.  Sorry for the misinformation on the previous post.