Have you ever thought about buying a house with a credit card? It seems impossible, right? It certainly is not.

If your credit limit is high enough, you can use your card to buy a house outright. Basically, if money is not an issue, you can buy a house with a credit card.

Buying a home with a credit card can have some advantages, but you should still be careful.

You can buy groceries and gas and shoes with a credit card. But can you buy a house with a credit card?

Here’s how you can put your down payment on a piece of plastic.

Getting a Cash Advance

In order to put a downpayment on a house using a credit card, you will need to take out a cash advance. A cash advance is a short-term cash loan taken out against the available line of credit on your card.

This will need to be paid back.

If your credit card has a PIN, you will be able to take your credit card to an ATM. If it doesn’t, you will need to take the card to a bank in your credit card’s network. Bring your ID.

Cash Advances Are Expensive

Getting a cash advance can be extremely costly. When you get a cash advance using a credit card, you will be charged a fee. Fees will vary by card issuer.

Some card issuers charge a flat fee, while some charge a percentage. It could be both or whichever is greater.

Sometimes the fee will be both a flat fee and a percentage or whichever is greater.

If you plan on getting a cash advance to pay for your home, make sure to check the fees.

On top of the fees imposed by your card issuer, you may need to pay ATM or bank fees. These fees will vary by institution.

As soon as you take out a cash advance, you may start to accrue interest on the loan.

Interest on cash advances is much usually higher than regular purchases.

Problems With Using a Cash Advance to Buy a Home

While you may have a credit limit high enough to buy a whole house with your credit card, your cash advance limit may be much lower.

In order to accomplish this seemingly impossible feat, your credit would need to be excellent. You would need to be able to pay back the total cash advance plus any additional fees and interest, which can quickly become enormous.

This is not a method you could use if you have an FHA loan. These mortgage loans are designed for people who cannot afford other loan options. Using a credit card would be a major red flag to your lender.

Can You Buy a House With a Credit Card?

Theoretically, if your credit limit is high enough, and your credit is excellent, you could easily buy a whole house with a credit card. If you are rolling in hundred dollar bills for fun on a Saturday, this could be an option.

Maybe just because you can.

Should You?

Even if you can buy a house with a credit card, you probably shouldn’t. While you won’t have to wait for approval on a mortgage, you could rick financial security.

Not only will you have to pay hefty interest, but you may damage your credit score.

If you max out your credit card, you will lower your available credit limit and increase your debt limit. These two factors will negatively impact your credit score.

This can make it difficult to secure future loans, and you will not have available credit if you face financial stress in the future.

You never know when you will face financial stress, especially in an economic system that is prone to ups and downs.

If you do find yourself in a bad credit situation, you have will have credit options.

Other Loan Options

If you are looking to buy a home, it may be wise to go with more traditional loan options. Although it may seem less fun and exciting, this is a much less financially risky move.

Buying a home is a huge investment, and it shouldn’t be taken lightly. You should always seek professional help.

Even if your credit limit is high enough to buy a house, it would likely be much cheaper to apply for a traditional mortgage. Over time, the interest and fees will be much less.

However, you will have to go through the approval process, which can seem like a drag in the technological age. We are all used to immediate satisfaction. Give me the house now!

Unless you are one of the lucky few who could pay down a huge credit card bill immediately, you should definitely look into qualifying for a mortgage.

Saving for a Down Payment

If you are looking to buy a home, you may be concerned about the down payment. If you make a 20% down payment, you can avoid paying for mortgage insurance.

If you have been saving for a down payment, use it. You can even dip into your retirement savings if you really must. Although, this can sound really unattractive.

Most lenders will not be happy to see you accrue additional debt when you are applying for a mortgage. It is best to avoid using a credit card, even to pay for the down payment.

Investing in Your Future Today

If you are looking to buy a home, it is always best to seek the help of a professional. This could be a real estate agent or a mortgage loan officer.

Can you buy a house with a credit card? Yes, but it may not always be the best financial option for you. It could be a risky financial decision unless you can pay down the balance immediately.

You can find more home buying tips here to help you make the best decisions for yourself.

Happy home buying.