Can You Pay Your Mortgage or Closing Costs With a Credit Card?

Purchasing a home is typically one of the largest purchases in a person’s lifetime. And with significant closing costs involved in purchasing a home, many wonder if they can use a credit card to potentially earn rewards on these large transactions.

Generally, the answer to this question is no. Mortgage lenders and title companies typically don’t accept credit cards as payment for closing costs. Usually, you’ll need to use a wire transfer or cashier’s check to pay closing costs.

That can be a bummer if you just opened a new credit card and have a welcome offer to meet. Still, credit cards aren’t usually accepted for mortgage closing costs because mortgage lenders and title companies don’t want to eat the cost of credit card processing fees, which can be significant because closing costs are usually large transactions.

However, there are some closing cost transactions you make before you get to the closing table that you may be able to use a credit card for, such as fees for your application, credit report, and appraisal. Or you may be able to pay a portion of your closing costs with a credit card and pay the rest with a wire transfer or cashier’s check.

Let’s look into mortgage closing costs and which closing costs you can potentially cover with a credit card.

Mortgage Closing Costs

Mortgage closing costs are home-buying fees and expenses you must pay when the property title is transferred from the seller to the buyer.

Closing costs vary depending on the home, type of loan, and location, but you can expect to pay closing costs of about 2% to 5% of the home’s purchase price. For example, on a $300,000 home, you’ll pay $6,000 to $15,000 in closing costs.

Closing costs homebuyers typically pay include:

Before you get to the closing table, you’ll receive a loan estimate and closing disclosure from your mortgage lender that details your closing costs. It will include your estimated cash to close, which is the sum of your down payment and closing costs minus any adjustments, seller contributions, and previous payments, such as deposits.

You’ll generally have to pay closing costs up front when you close on your mortgage. You may pay for some expenses before you get to the closing table, such as application fees or home inspection or appraisal fees. 

How To Finance Closing Costs

It’s common to pay closing costs when you close on a mortgage, but there are options for financing your closing costs. You may be able to roll closing costs into your mortgage or negotiate with the seller to cover some or all of the closing costs. 

Roll Closing Costs Into Your Mortgage

You may be able to finance closing costs as part of your mortgage. However, not all lenders allow you to do so. It also depends on the home appraisal, as mortgage companies won’t lend you more than the house is worth. 

If the purchase price plus closing costs come out to more than the home was appraised for, the mortgage company probably won’t let you finance your closing costs unless you have a large enough down payment to make up the difference.

If you roll closing costs into your mortgage, you can avoid paying for closing costs upfront. However, you’ll pay interest on the closing costs you financed, and it will increase your monthly mortgage payments.

Some lenders offer a no-closing-cost mortgage with a higher interest rate than a comparable mortgage. While you’ll pay more interest over the life of the loan, it can help you get into a home because you don’t have to pay upfront for closing costs.

Finance Closing Costs With A Personal Loan or Credit Card

Other options for financing closing costs include taking out a personal loan or using a credit card for some of these costs.

A personal loan might allow you to access closing cost funds. Still, personal loans generally have higher interest rates than mortgages, so this is not as good an option as paying for closing costs upfront or rolling them into your mortgage. Also, taking out a new loan could interfere with mortgage approval and closing, as lenders generally don’t like to see homebuyers open new credit accounts before closing.

Credit cards can help you cover some closing costs, but not many. You might be able to pay a home inspector or appraiser with a credit card, but the mortgage and title companies aren’t likely to accept credit cards.

Asking the seller can help you reduce or eliminate paying for the closing costs upfront. Your real estate agent may be able to negotiate a deal, especially if you agree to a higher purchase price.

Hot Tip: You may have additional options for getting help with closing costs if you apply for a first-time homebuyer assistance program, which may also offer help with your down payment. Homeownership assistance programs may offer grants, interest-free loans, or forgivable loans you can use to cover some or all of your down payment and closing costs. These programs are typically available to low and middle-income homebuyers.

Using a Credit Card For the Home Inspection Bill

It may be possible to pay for a home inspection using a credit card. But it depends on the home inspection company’s policies. Many home inspectors accept credit cards, but not all do. 

If you must pay for your home inspection using a credit card, ask home inspectors whether they accept credit cards before you hire one. Some companies charge a fee to accept credit card payments, so ask about that, too.

Paying for a Home Appraisal With a Credit Card

Just like paying for a home inspection with a credit card, this depends on the appraisal company. While some appraisal companies accept credit card payments, not all do. As with a home inspector, ask home appraisers whether they accept credit cards and if there are associated fees before you hire one. 

Making a Down Payment on a House Using a Credit Card

Don’t count on using a credit card to pay for a home down payment, as most lenders won’t accept credit cards for down payment funds. Mortgage lenders typically require that you make a down payment with verified funds from a bank account or other verified fund sources, such as a retirement account or a well-documented gift from a family member.

Even if you can use a credit card for a home down payment, it may not be a great idea unless you have the cash to pay it off right away. Credit card interest rates are far higher than typical mortgage rates, so you’re better off paying more for your mortgage than using a credit card to finance your down payment. 

If you need help making a down payment for a home, you may be able to use gifts from family members or take advantage of down payment assistance programs, some of which also offer help with closing costs.

How To Buy a House With a Credit Card

Most sellers don’t accept credit cards as payment for a home. While you can typically pay cash via a wire transfer or cashier’s check, credit cards aren’t a useful option because of the processing fees, which can be a huge additional expense on a large transaction such as a home.

Processing fees and acceptable payments aside, credit cards typically don’t have enough credit available to buy a home. For example, if you have a credit card with a $30,000 limit, you’ll have difficulty finding a home for that price.

But a credit card can still help you buy a home — here’s how:

• Earn Cash-back: Apply for a cash-back card to get cash-back for every purchase. While you could redeem your cash-back for a statement credit or other rewards, most cash-back cards offer cash deposits or checks you can add to your house fund.
• Use a Balance Transfer: High-interest credit card debt might make qualifying for a mortgage tough. If you use a balance transfer, you can avoid interest charges during the introductory period and pay down your credit card debt to get a better shot at mortgage approval. 
• Improve Your Credit Score: Responsible credit card use can help improve your credit. Regular on-time payments and lower credit card balances can increase your credit score, which makes it easier to get approved for a mortgage at the best rates.

Bottom Line: Although you probably can’t buy a house with a credit card, using a credit card to earn rewards, reduce debt, and improve your credit score can help you get a good mortgage.

Paying Your Mortgage With a Credit Card

Lenders generally don’t accept credit cards for mortgage payments because of the high processing fees. However, paying your mortgage with a credit card using third-party payment services is possible. You can also earn cash-back to earn cash on purchases that can be used in turn to help make mortgage payments.

A third-party payment service such as Plastiq allows you to pay your mortgage with a credit card. However, you should expect to pay a convenience fee of about 2% to 3% of the payment amount. This fee could negate your earnings if you’re trying to collect rewards by paying your mortgage with a credit card.

Even if you’re okay with the fees, consider whether you can pay your credit card bill before interest accrues. You can rack up high-interest debt if you make a habit of using credit cards to pay your mortgage bill without paying off your credit card bill each month. Ask your mortgage lender about options such as loan modification or forbearance if you can’t afford your mortgage payment.

If you’re earning rewards with a cash-back credit card, you could take what you earn each month as a bank deposit and put it toward your mortgage.

Hot Tip: Read about the just-launched credit card that allows you to earn points for mortgage payments and more!

Should You Use a Credit Card for Your Mortgage or Closing Costs?

Using a credit card to pay for some of your closing costs and even your mortgage payment is possible. But should you? 

Before you use your credit card for these expenses, get the facts straight. Find out how much you can pay using a credit card, any associated fees, and other policies the lender or title company may have for credit card payments. 

It’s also wise to look at your budget and consider whether you can pay what you plan to charge to your credit card. Ideally, you’ll pay it off before interest accrues, whether paying off your full balance each month or paying off your balance before an introductory rate expires. 

Final Thoughts

You generally can’t pay most closing costs with a credit card, but there are some small closing costs that you may have the option to pay with a credit card, such as the fees you pay for your application, credit report, home inspection, and home appraisal. 

You should plan to use a wire transfer or cashier’s check for most home-buying expenses. And when it’s time to make your mortgage payments, you’ll typically need to do so from your bank account. 

Due to the fees, restrictions, and potential credit card debt, paying closing costs or your mortgage payment with a credit card is usually not a great idea.