Using a Amex personal loan for a down payment on a HML

4 Replies

As long as it doesn’t kill your debt to income, I would do it and have done it. If you apply for the mortgage within three months of that loan hitting your account you will have some more hoops to jump through of where the money came from, but other than that, it has worked out form me. Three years at 0% is awesome! 

@Eric Horton - I've done similar, but much more risky plays in the past. The #1 most important piece to this puzzle is your exit strategy. You better still be able to qualify for a refinance in case you can't flip the property. Personal loans can screw up DTI.

I looked into using an American Express personal loan to use as a down payment. During the application process, I read in the terms that you cant use the loan to pay for Real Estate/education/small businesses. Not exactly sure why but here is an article that describes the rates and terms.

You can absolutely do that.  And I don't see anything wrong with that so long as you can pay it back.  Be sure to read all the fine print.  Sometimes they throw in little sneaky fees with an extraordinary interest rate upon due.

Is this going to be a flip or a buy and hold property?  If it's a flip be absolutely sure your comps are good and be prepared for possibly not hitting your target price or cost over runs for repairs.  Time and time again I see posts on here about this.

If it's a buy and hold you can certainly use your cash flow to help pay some of that personal loan back.

One more thing. Make sure you know all the fees for your HML. Some are really good with giving you those up front while others aren't. Have some type of backup strategy in case you can't refinance into a mortgage or it doesn't sell.

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