Home Buyers

Use Your Tax Refund to Buy a Home

What do you usually use your tax refund for? Do you put it in savings? Do you go on a shopping spree?

The Down Payment


What if you used your tax refund to buy a home? When qualifying for a loan, some loans will require a down payment. Wait, don’t freak out! The down payment isn’t as scary as it sounds. Many times our clients take their tax refund and use it to cover some or ALL of their down payment. How awesome is that? Not to mention, some loan programs don’t even require a down payment!

What If the Home Loan I Choose Does Not Require a Down Payment?

Good for you! If you are a home buyer purchasing a home with a 100% financing loan, like VA or USDA, there are other uses in your real estate transaction for your tax refund (this will only improve your buying power!).

  1. Use your tax refund to pay your closing costs. Closing costs will cost you between 2-5 % of the sales price. Let me just mention that closing costs can be negotiated for the seller to pay a portion or all of your closing costs, depending on the transaction. Remember, every transaction is different!
  2. Pay off debt such as car loans, credit cards, etc. Talk to your lender before doing this! Your lender will give you the best advice so that your efforts will have the most effect on your loan qualification and approval 🙂
  3. Emergency fund! You will be a homeowner soon (or again) and an emergency fund may come in handy for furniture, updates, etc.

Common First Time Home Buyer Loans


There are many loan programs offered to first time home buyers that require little to no money down! Below is a list of these programs and the down payment minimum required.

  • VA Loan : No down payment required
  • USDA Loan : No down payment required
  • HomeReady™ Loan : 3% down payment minimum
  • Conventional Loan (with PMI) : 3% down payment minimum
  • FHA Loan : 3.5% down payment minimum

Another perk for first time home buyers is the mortgage payment interest deduction. The mortgage payment interest deduction is the tax deduction a home buyer gets from making payments on their mortgage interest.

If you are considering buying a home and have any questions, please feel free to reach out! I bought my first home during tax season and it truly does pay off!

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