Cash Back Mortgages: A Little Breathing Room Up Front

Let’s face it—buying a home comes with more than just the down payment. There’s furniture to buy, movers to pay, legal fees, utilities, that new couch you swear you need… it adds up fast.

That’s where a cash back mortgage can come in handy. Basically, your lender gives you a lump sum when the mortgage closes. It’s not free money—but it can give you some breathing room when you’re juggling a bunch of upfront expenses.

Here’s what you should know:

• You’ll likely pay a higher interest rate than with a standard mortgage
• If you break the mortgage early, you’ll need to pay back that cash
• You can’t use it toward your down payment—it’s for closing costs and extras, not the purchase itself

To qualify, you’ll generally need:

• Solid credit
• Reliable income
• Some savings for legal and closing costs (aim for around 1.5% of the home’s price)

Is it right for everyone? Nope. But if you’re short on cash after saving for your down payment, or you just need a little help getting settled, it can make the early days of homeownership a whole lot less stressful.