Tax refund for a home loan

Get the best mortgage deal with your tax refund


For some potential homebuyers it can be a struggle to come up with the down payment they need to qualify for a mortgage loan. While there are many sources of down payment funds to consider, one great option is your tax refund. If you find yourself getting money back from Uncle Sam, instead of buying a car or taking a trip, consider using the money as a down payment for a mortgage. Doing so just might allow you to buy a bigger house or obtain a more advantageous interest rate.

Your refund could help you get more house for your money

It’s widely held that the ideal down payment amount is equal to 20% of the purchase price. While most lenders and different loan programs allow for smaller down payments to secure a home loan, buyers who can put down 20% will find themselves in a good position to secure financing. You may also avoid having to pay for mortgage insurance, which frees up more cash to put toward your house payments. In general, the larger your down payment, the more house you can afford. Adding your tax refund to your down payment may get you to 20% and help you buy a bigger home.

Getting a better rate with your tax refund

Putting your tax refund into your down payment can also help you secure a lower interest rate. Your down payment translates to equity in the property. Lenders consider buyers with more equity to be at a lower risk of defaulting on the loan and may reward them with a lower interest rate. That means a lower monthly payment and substantial savings over the life of the mortgage.

Paying closing costs with your tax refund

The other major hurdle some buyers face is covering the closing costs of their mortgage loan, which can range from one to three percent of the loan balance. Closing costs are the fees paid to your lender for the work needed to finalize the transaction. While an experienced lender can help find ways to minimize or cover closing costs, using your tax refund to pay them is a fine option that can get you across the finish line and into your new home.

Do your homework

Using your tax refund to obtain mortgage financing may be the right option for you, but you should do some research. Start weighing options with the help of several easy to use calculators. You can find out how much mortgage you might qualify for at different down payments. You can see how different down payment amounts will affect how much home you can afford. You can also see how your mortgage payments are affected by your down payment for a fixed-rate or adjustable rate mortgage.

We stand ready to serve

All the rates and dollar amounts can be overwhelming. It's a good idea to consult your financial advisor about the best use of your tax refund. When it comes to getting a mortgage, our team of lending professionals is here to help you get the optimal loan for your situation, subject to property and credit approval.


Have you already started searching for a home? You’ll want to be ready to make an offer when the time is right. We can help you get prequalified so you won’t miss out on your dream home.