Real Estate

Can unsecured line of credit be used as part of downpayment?

  • Last Updated:
  • Jan 16th, 2022 7:39 am
[OP]
Newbie
Aug 28, 2020
81 posts
35 upvotes

Can unsecured line of credit be used as part of downpayment?

Sorry if this was asked previously.
I just know that secured line of credit like HELOC can be used for downpayment. Do lenders allow unsecured line of credit for downpayment as well, assuming debt ratio is fine? Is there an official regulation on what can be used for downpayment?

For example, let's say the property purchase price is 999,999, and I have:
- 90K cash/savings
- 90K HELOC
Can I use 20K from my unsecured line of credit so that I have total of 200k (20%) downpayment?

Thanks.
Last edited by liambll on Jan 15th, 2022 10:51 pm, edited 1 time in total.
6 replies
Deal Expert
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Jan 27, 2004
48400 posts
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T.O. Lotto Captain
liambll wrote: Sorry if this was asked previously.
I just know that secured line of credit like HELOC can be used for downpayment. Do lenders allow unsecured line of credit for downpayment as well, assuming debt ratio is fine? Is there an official regulation on what can be used for downpayment?

For example, let's say the property purchase price is 999,999, and I have:
- 90K cash/savings
- 90K HELOC
Can I use 20K from my unsecured line of credit so that I have 20% downpayment?

Thanks.
thats 2 %.

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Deal Addict
Jan 13, 2014
2245 posts
1211 upvotes
Calgary
Yes as long as your debt service and lender is ok with it.
Sr. Member
May 3, 2013
686 posts
286 upvotes
Toronto
Lender will calculate your debt ratio as if you use up all your credit lines (secured and unsecured). Unsecured LOC is expensive. Ask the lender if you close the unsecured line, if that amount can be allocated to increase the mortgage.
[OP]
Newbie
Aug 28, 2020
81 posts
35 upvotes
realtorhome wrote: Lender will calculate your debt ratio as if you use up all your credit lines (secured and unsecured). Unsecured LOC is expensive. Ask the lender if you close the unsecured line, if that amount can be allocated to increase the mortgage.
Thanks.
After running GDS, TDS calculation on a spreadsheet, it seems debt ratio is fine, but downpayment amount is what limits the maximum purchase price.

We have an unsecured LOC at prime+0.25%, so we want to make use of that for downpayment if possible.
Deal Fanatic
Nov 22, 2015
6382 posts
6221 upvotes
liambll wrote: Thanks.
After running GDS, TDS calculation on a spreadsheet, it seems debt ratio is fine, but downpayment amount is what limits the maximum purchase price.

We have an unsecured LOC at prime+0.25%, so we want to make use of that for downpayment if possible.
Most lenders use 3% as the monthly repayment amount for unsecured credit, so a $20K line of credit is $600/month for debt ratio calculation purposes

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