Real Estate

Do I need enough cash for closing costs or can I use LOC?

  • Last Updated:
  • Oct 7th, 2020 2:31 pm
[OP]
Deal Expert
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Feb 9, 2003
18400 posts
2791 upvotes
Langley

Do I need enough cash for closing costs or can I use LOC?

Hey all...

I'm looking to buy a house around a mil, maybe a little more. I have about $210k.

Can I buy a house at 1.05m, use the 210k for the DP, and put closing costs (~$20k) onto my existing unsecured line of credit?

Or am I limited to a purchase price of about $950k because I'll need to set aside about $20k of my cash for the closing costs and therefore I really only have a DP of $190k.

Or is this something that varies from lender to lender?

Also
-Only considering 20% down.
-Presume income is enough for payments


Thanks.
2 replies
Deal Guru
User avatar
Mar 23, 2008
11597 posts
7856 upvotes
Edmonton
i6s1 wrote: Hey all...

I'm looking to buy a house around a mil, maybe a little more. I have about $210k.

Can I buy a house at 1.05m, use the 210k for the DP, and put closing costs (~$20k) onto my existing unsecured line of credit?

Or am I limited to a purchase price of about $950k because I'll need to set aside about $20k of my cash for the closing costs and therefore I really only have a DP of $190k.

Or is this something that varies from lender to lender?

Also
-Only considering 20% down.
-Presume income is enough for payments


Thanks.
I'm going to say you should probably talk to your lender/broker. You don't want a last minute glitch to hold up your lender advancing your mortgage. It might depend on your existing credit score, and/or your debt servicing ratios.

But I'm not a broker, never even played one on tv...

C
Jr. Member
User avatar
Jun 3, 2019
172 posts
137 upvotes
GTA
i6s1 wrote: Hey all...

I'm looking to buy a house around a mil, maybe a little more. I have about $210k.

Can I buy a house at 1.05m, use the 210k for the DP, and put closing costs (~$20k) onto my existing unsecured line of credit?

Or am I limited to a purchase price of about $950k because I'll need to set aside about $20k of my cash for the closing costs and therefore I really only have a DP of $190k.

Or is this something that varies from lender to lender?

Also
-Only considering 20% down.
-Presume income is enough for payments


Thanks.
A lender will ask for proof of down payment and closing costs prior to funding and they generally want to see it in your account for a minimum of three months. You could take the funds out of your line and put it in your bank account now, and as long as the line's monthly payments do not affect your TDS (total debt service) ratio where you no longer qualify for the mortgage requested, then you should be ok.
Realtor® & Mortgage Agent

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