Fannie/Freddie Source of Funds: My customer wants to take a $200,000 loan from his business for his down payment. Would this be an acceptable form of down payment?
No -- an unsecured loan is not allowed. Any loan for funds to close or down payment must be secured with an asset the borrower owns (401k, car, home, etc.). A valuation of the asset may be needed with full documentation of the terms of the loan, and the borrower must qualify with the loan payment. The borrower may use business assets toward a down payment, but will need to fully document with account statements (explaining and sourcing all large deposits) and a letter from the CPA that the use of the funds will not be a detriment to the business. Underwriters are typically hard on this funding source.
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