saving for down payment

[ryanjjj]

It seems 3.5% is the minimum down payment these days and my wife and I are now in the process of saving about $20k to purchase a $400k home later this year.

I had an idea for getting our savings up to $20k quicker so tell me if you think there's a problem with my thinking.

We have no credit card debt and $200k/year household income but only $5,000 savings toward the home purchase currently.

We spend about $5-6k per month on a credit card that is paid off monthly. I'm thinking about letting the credit balance grow and just put money in savings until we get the $20k put away in savings.

I'll put it on a 0% card so I'm not paying interest than just begin paying off the balance monthly after I reach $20k in savings

Lenders are requiring 3.5% - 5% down payment in cash but they only require that the progression of growth is shown (you can NOT just get a cash advance on a credit card). I will be able to show the progression of growth in savings account and then I'll have a $12-15k balance on a credit card that equals a monthly payment of $250 or so which shouldn't affect the loan qualification too much.

Would this work or am I missing something?

[chefette]

If I am reading you right, you want to let your credit card balance go, so that you can use that money to save and put on a down payment for a home? No. Cut your credit card up, use cash for what you need, and save the rest for your down payment.
You spend 5-6 k a month on your credit cards? What are you using them to pay for, your car loan(s) and your rent?

[ryanjjj]

If I am reading you right, you want to let your credit card balance go, so that you can use that money to save and put on a down payment for a home? No. Cut your credit card up, use cash for what you need, and save the rest for your down payment.
You spend 5-6 k a month on your credit cards? What are you using them to pay for, your car loan(s) and your rent?

chefette,

Thanks for the reply. I'm not really looking for advice on whether or not I should be using credit cards. I'm looking for advice on whether or not this process will actually work for loan qualification. I know a lot of people can't handle credit but it can be very useful when used wisely.

My goal is NOT to accumulate credit card debt just for the heck of it. My goal is to save $20k as fast as possible so I can upgrade into a larger home and take advantage of low home prices and low interest rates that exist right now.

[chefette]

Well then Ryan, my answer would be the same. Again, I may be dense, but what do you mean when you say.."I'm looking for advice on whether or not this process will actually work for loan qualification."

If you are concerned about "taking advantage" of low home prices, I would think you have plenty of time......if you have read any of these posts you would realize that none of us here feel that home prices are going to change anytime soon. Good Luck.