Can I use a Federal Student loan to put a down payment on a house?

[Jakem8705]

What is the name of your state (only U.S. law)? Wisconsin

Okay so I'm a grad student and I'm joining the Army National Guard as a officer and they will pay $40,000 off in federal student loans.

I was wondering if I could get that much in federal student loans could I use that money to put a down payment, down on a house?

Thanks,
-Jake

 

[Antigone*]

What is the name of your state (only U.S. law)? Wisconsin

Okay so I'm a grad student and I'm joining the Army National Guard as a officer and they will pay $40,000 off in federal student loans.

I was wondering if I could get that much in federal student loans could I use that money to put a down payment, down on a house?

Thanks,
-Jake

No, you are supposed to use that for school ~ that is why they are called student loans. If you will not be using the money to further your education then don't take it.

 

[Jakem8705]

No offense but can I please have some legal backing? I'm sick of wasting my money on renting and would really like to buy a house to help my friends who are poor in Milwaukee rent really cheap.

Thanks,
-Jake

 

[John_DFW]

No offense but can I please have some legal backing? I'm sick of wasting my money on renting and would really like to buy a house to help my friends who are poor in Milwaukee rent really cheap.

Thanks,
-Jake

You most likely won't get a home loan if the source of the down payment is your student loan, legal or not.

 

[cyjeff]

No offense but can I please have some legal backing? I'm sick of wasting my money on renting and would really like to buy a house to help my friends who are poor in Milwaukee rent really cheap.

Thanks,
-Jake

You realize, of course, that you will have to show where the money comes from, right?

 

[CreativeBlock]

No offense but can I please have some legal backing? I'm sick of wasting my money on renting and would really like to buy a house to help my friends who are poor in Milwaukee rent really cheap.

You'd be committing fraud. On the promissory note will be the words "You must certify that you will use federal student aid only for educational purposes."

Look up "perjury" and see how it relates to government backed loans. Unky Sam, especially when it regards to loan he makes, is not someone you want to anger.

If you use choose to ignore good sense and still use the funds for a down payment, bear in mind a few factors:

1) During the loan process, the lender will SEE you have a student loan ~ and will see exactly how much it is for. It WILL affect your DtI ratio.

2) During the loan process, you will have to prove the source of your down payment. They will want to know where the funds came from ~ especially considering how large an amount they will be.

3) Along with #1 & #2, if your down payment is roughly equal to your SLs, they'll know what you did.

 

[proud_parent]

No offense but can I please have some legal backing? I'm sick of wasting my money on renting and would really like to buy a house to help my friends who are poor in Milwaukee rent really cheap.

Thanks,
-Jake

Here's the U.S. Department of Education's take:

What can I use my federal student loan money for?

You may use the money you receive only to pay for education expenses at the school that awarded your loan. Education expenses include school charges such as tuition; room and board; fees; books; supplies; equipment; dependent childcare expenses; transportation; and rental or purchase of a personal computer. Talk to someone at the financial aid office at your school if you need more details.

Your Federal Student Loans: Learn the Basics and Manage Your Debt

 

[Proserpina]

The sheer audacity is almost - almost - deserving of a slow hand-clap...

 

[CourtClerk]

The sheer audacity is almost - almost - deserving of a slow hand-clap...

Where is the "like" button????

 

[Antigone*]

The sheer audacity is almost - almost - deserving of a slow hand-clap...

a one-handed slow hand-clap

 

[rowz]

And THIS is what wants to become an OFFICER in the US Armed Services?

 

[NC Aggie]

Jakem8705 it appears you got more criticism than feedback for asking a valid questoin. But the short answer is NO, you can't use FEDERAL student loans as a direct down payment on a home purchase. The loans are sent directly to the institution where you're enrolled. Now if you have additional scholarships or funding sources for school, you may be eligible for a student refund from your institution, but it's typically not going to be excessive because there's a maximum amount you can take out a loan for each semester and I'm pretty certain you're not going to get $40,000 in one semester at any school.

Now if you have other funding sources for school, i.e. scholarships and fellowships and depending on how they're awarded and applied to your student accounts then it's possible that you can still apply for federal student loans to cover some or most of your school related expenses and receive the excess from the scholarships and followships to use as down payment for your home and this is totally legal.

 

[ecmst12]

Are you even enrolled in school?

If you ARE enrolled in school, you can borrow *some* money above and beyond your tuition and book costs for living expenses, but not the kind of money you would need for a down payment on a house.

On the other hand, as a vet you can also get a VA loan which does not even require a down payment at all. You would just need money for your earnest deposit and possibly for closing costs (though you may be able to get sellers assist for that). So if you have income enough to be able to afford a house payment, you can buy a house WITHOUT taking out fraudulent student loans.

Of course, I just saw you haven't even JOINED the military yet, so forget about the VA loan until after you're enlisted.

At any rate, you cannot take out a student loan unless you are actually enrolled in school. The money is sent directly to the school and any excess is only sent to you after all tuition and books have been paid for. And if you drop out of school, you have to pay the loans back IMMEDIATELY.

 

[Antigone*]

Jakem8705 it appears you got more criticism than feedback for asking a valid questoin. But the short answer is NO, you can't use FEDERAL student loans as a direct down payment on a home purchase. The loans are sent directly to the institution where you're enrolled. Now if you have additional scholarships or funding sources for school, you may be eligible for a student refund from your institution, but it's typically not going to be excessive because there's a maximum amount you can take out a loan for each semester and I'm pretty certain you're not going to get $40,000 in one semester at any school.

Now if you have other funding sources for school, i.e. scholarships and fellowships and depending on how they're awarded and applied to your student accounts then it's possible that you can still apply for federal student loans to cover some or most of your school related expenses and receive the excess from the scholarships and followships to use as down payment for your home and this is totally legal.

He got his answer, straight up, aggie.

This advice is free so if it came with a few more freebie, the OP got what he paid for.

 

[Jakem8705]

Sweetness!

Thanks everyone for the great advice!

It looks like I'm getting the house for free with my student loans and then the military is paying back the student loans.

Sooooooooooo Happpyyyyy!!!!

Hope everyone has a great day! you guys are great!