We are trying to sell our current home and want to start construction on a new home. All of our down payment money is tied up as equity in our current home.

FHA Loan Rules For Earnest Money

We would be applying for an FHA loan. Build times are about 4 months. If I were to take a cash advance out for our earnest money, and then reimburse that money to the CCs after we sell our current home, how does the LOs see that? Is this a no-no? You cannot use that money for your down payment so it is a little gray - if you pay it off and replace the funds with cash from the sale you should be able to get around it - just another contingency on your loan -.

Understanding the Earnest Money Deposit | urisofod.web.fc2.com®

You are right maybe I didnt explain myself well - it will be questioned and they will need to explain what they are doing - They CANNOT use a loan for their down payment but they can pay that loan off or replace with their own funds prior to closing on the new house - obviously it would be easier if they could just use their own money and not have to do this.

If they do not pay off the loan it would have to be counted against their debt ratios and they would still have to use their own funds to close the loan -. The earnest money is just a deposit with the contract - I have never had anyone do this but it seems like something that could be legally worked around.

If you put all of your monthly bills and expenses on your CC and saved your cash, you could effectively get a cash advance that way. Not sure if doing it this way has any effect on the other issues, but I would think it would be more like carrying debt and less like taking a loan for your downpayment. Forums posts are not provided or commissioned by FICO.

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The Importance of Being Earnest: All About Earnest Money Deposits

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