When purchasing a home in Michigan, one of the most important parts of the mortgage approval process is documenting your assets. If you’re buying your first home in Grand Rapids, refinancing in Detroit, or purchasing a vacation property near Traverse City, we must verify the source of your funds. Not all asset sources are treated equally during underwriting. Understanding what is considered acceptable and what may create challenges can help Michigan homebuyers avoid delays and surprises during the loan process.
Cryptocurrency Can Be Used for a Michigan Mortgage
Cryptocurrency has become increasingly common among homebuyers, and mortgage lenders may allow cryptocurrency assets to be used toward a down payment, closing costs, or reserve requirements. However, there is an important condition: The cryptocurrency must be converted into U.S. dollars before closing. In addition, if the conversion creates a large deposit into your bank account, the source of those funds must be properly documented. Lenders will typically require a clear paper trail showing the ownership of the cryptocurrency account and the transfer of funds into a verified bank account. Proper documentation is critical to ensure the funds can be used for your Michigan mortgage transaction.
Employer Assistance Programs May Be Acceptable
Many employers now offer housing assistance programs to help employees purchase homes. These programs can be valuable tools for Michigan homebuyers who need additional funds for their purchase.
Employer assistance
- Grants
- Fully repayable second mortgages
- Fully repayable unsecured loans
- Forgivable second mortgages
- Forgivable unsecured loans
- Deferred-payment second mortgages
- Deferred-payment unsecured loans
Depending on the program’s structure, these funds may be acceptable for down payment and closing costs. The terms of the assistance program must be reviewed and approved by the lender.
Borrowed Funds Secured by Assets
Borrowed funds may also be acceptable when an asset owned by the borrower secures them. While these funds may be used for the transaction, borrowers should understand that any required monthly payment associated with the loan may need to be included in the debt-to-income (DTI) calculation.
Examples
- Securities-backed lines of credit
- Loans secured by investment accounts
- Other asset-secured borrowing arrangements
Personal Unsecured Loans Are Generally Not Acceptable
One of the most common misconceptions among homebuyers is that they can take out a personal loan to cover a down payment. In most cases, personal unsecured loans are not considered an acceptable source of assets.
Examples
- Signature loans
- Overdraft protection advances
- Personal lines of credit
- Credit card cash advances
- Unsecured consumer loans
Because an asset does not secure these funds and create additional debt obligations, they typically cannot be used as a source for down payment or closing funds.
Limited Use of Credit Cards for Mortgage Expenses
Credit cards generally cannot be used as a source of down payment funds. However, certain mortgage-related expenses may be charged to a credit card. In many cases, borrowers may use a credit card to cover specific fees, up to 2% of the loan amount.
Examples
- Credit report fees
- Appraisal fees
- Rate lock fees
- Origination fees
Before moving money between accounts or converting assets, speak with one of our mortgage professionals.
