Can you buy a House with a Credit Card: Mortgage Pros & Cons

For an every man, buying a house is one of the ultimate financial goals in the US and it’s no overstatement either for obvious reasons. There’s various options available for people to get a house for themselves, including mortgages, savings, marginal leverage, loans and also credit cards. Yes, you can buy a house with a credit card but it may not be the best of ideas out there. 

Houses cost plenty of money so if you intend to buy a house with a credit card, you’d obviously need a relatively high credit limit to cover the costs and a good credit score goes without saying since it is essential for a high credit limit but if you have a good credit score, you can just as easily qualify for a mortgage with a far less interest rate. This is why it does not make sense to use a credit card to buy a home.

But let’s suppose that you don’t want a mortgage to finance a house-purchase for whatever reason (assuming you have a good credit score) and don’t want or have any options except a credit card, you can of course use a credit card to purchase the house but its not as simple as handing over your card to the realtor after the deal is done. 

How to Buy a House with a Credit Card

House deals or real estate closings are held at real estate agencies or title companies’ offices with buyers and sellers signing legal documents for transfer of ownership. The payment is also handled by the title company and they typically require certified funds so a credit card transaction won’t do. So the only way you can purchase a house with a credit card is to get a cash advance and then use that to get a cashier’s check. 

And that’s why purchasing houses or making down payments with credit cards is a problem. You accrue an incredibly high interest rate on your cash advance, typically in the range of 25-30% and you don’t get a grace period either so interest starts accruing with immediate effect. On the other hand, a typical 15 year fixed-rate mortgage carries an average interest rate of 4.60% according to Forbes. This, along with other reasons covered below, makes purchasing a house or making a real estate down payment with a credit card unattractive.

Why Credit Card Cash Advance for House Purchase is a Bad Idea

  • You accrue a far higher interest rate on a cash advance than a traditional mortgage.
  • Cash Advances have their own separate credit limits. If the overall credit limit on your credit card is $30,000, your cash advance limit could possibly only be a third of that. 
  • Cash Advances do not have any grace periods, and you start accruing interest on the advance immediately. 
  • Cash Advances have high transaction fees that typically make up 5% of your cash advance.
  • You don’t earn points for cashbacks and other rewards on cash advances.

So, there’s lot of reasons why a cash advance for a real estate deal is a bad idea and a mortgage is often considered the conventional way to finance a house payment if you don’t have enough cash at hand but a mortgage can have some disadvantages as well. Below, we compare the pros and cons of mortgage. 

Pros and Cons of buying a house with Mortgage


You pay a far lower interest at a fixed rate over time if you choose to finance a home purchase through a mortgage. On the other hand, you spare your credit card from maxing out or exceeding credit utilization by avoiding a payment through credit card. Credit overutilization is not a healthy credit indicator and it’ll take a toll on your credit card. 


Mortgages involve a lot of paperwork and you’ll likely need to gather a lot of documents for your application and this could take a significant amount of time. A credit card cash advance on the other hand, is relatively straightforward and will save you the time you’d otherwise spend on mortgage paperwork. 

While the fixed interest you pay on a typical mortgage is universally far lower than what you’ll need to pay on a credit card cash advance, mortgage involves additional fees that supersede the fees you’d pay on a credit card cash advance.

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Habib Ur Rehman
Habib Ur Rehman
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