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Can You Take Cash Out of a Home When You Buy It?

Can you take cash out of a home when you buy it?

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

A question we are frequently asked is if you can take cash out of a home when you buy it and the short answer is no. Lenders do not allow you to personally receive proceeds from a mortgage used to purchase a home.

In some cases you may be approved for a mortgage amount that is higher than the loan you need to buy the property. In this situation you may wonder if you can take out the difference between the mortgage you are qualified for and the loan you need but the answer is still no.

For a home purchase loan, lenders are only willing to lend you the amount of money you need to complete the property purchase. This guideline applies even if you earn enough money to afford a higher mortgage amount and monthly loan payment.

Another scenario when borrowers ask if they can take cash out is if the appraised property value is higher than expected. In this case, you have more homeowners equity than you anticipated so you may want to take cash out when you buy the property but this is also not permitted.

The final scenario when people ask if they can take cash out when they buy a home is if they make a large payment and again the answer is no. In this situation it usually makes more sense to make a smaller down payment and increase your loan amount rather than take cash out with the mortgage.

Please note that you are usually required to wait six months from when you buy your home until you are eligible to use a cash out refinance or home equity loan to take cash out of your property. We recommend that you contact multiple lenders in the table below to learn more about accessing the equity in your home after you buy it.

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Current Mortgage Rates as of October 19, 2019
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Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. Click for more information on rates and product details.

If you bought your home for cash and want to access your equity sooner than six months you can use a delayed mortgage but this program applies relatively strict qualification guidelines and requires you to pay a higher mortgage rate.

Review How a Delayed Mortgage Works

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About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR.  Harry is a licensed mortgage professional (NMLS #236752). More about Harry

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