It is very unlikely that you can directly pay your mortgage lender with a credit card. However, there are a few workarounds that can help you pay your home loan with plastic. But it’s important to understand other factors involved when paying your mortgage with this kind of card, such as possible fees and other financial consequences.
Read on to learn how to pay your mortgage with a credit card and what to consider before you do so.
Key Points
• It’s highly unlikely that you can pay a mortgage directly with a credit card, but there are some workarounds.
• Third-party services like Plastiq allow credit card payments for mortgages, but charge fees.
• Fewer and fewer companies allow you to buy a money order with a credit card.
• Cash advances or balance transfers from credit cards may be used to pay mortgages, but both typically come with fees and higher interest rates.
• Alternatives to using credit cards for mortgage payments include requesting mortgage forbearance or loan modification, refinancing, or taking out a personal loan or home equity line of credit.
How to Pay Your Mortgage With a Credit Card
If you’re wondering if you can pay your mortgage with a credit card – It’s highly unlikely that you can do so directly. That said, there are several ways you can use workarounds to pay your mortgage with a credit card, including using a money order, utilizing third-party services, and getting a cash advance.
Use a Third-Party Service
Some third-party services facilitate mortgage payments using your credit card and send a payment to your lender on your behalf. Companies like Plastiq allow you to use select credit cards to make mortgage payments through their platform.
For the privilege, you’ll most likely need to pay a convenience fee — Plastiq charges a processing fee of 2.90% — each time you make a mortgage payment using your credit card. And, depending on how that payment is delivered (say, check or bank transfer), you may also be charged an additional fixed fee that can range from 99 cents to $39. You may also have the option to make recurring payments or to make your payments manually.
Buy a Money Order
Depending on your location and the retailer, you may be able to purchase a money order with your credit card. Then you’ll simply take the money order and deposit it at your bank and transfer the amount to your mortgage lender.
Keep in mind that most retailers may not accept credit cards as a form of payment for money orders — several major companies, including 7-11 and Western Union, have ceased this service – so it’s best to check ahead of time if you plan to use plastic. Even if you can, money orders tend to have a limit of $1,000. That means if you want to go this route, it may take you a few transactions before your money orders total enough for your mortgage payment.
Additionally, you may incur a fee for each money order you buy. Also keep in mind that some credit card issuers treat money order purchases as cash advances, which can result in a fee and interest charges at a rate that’s usually higher than the standard purchase APR on a credit card.
Transfer a Balance to Your Bank Account
You could attempt to conduct a balance transfer, with the funds going into your bank account — some credit card issuers may allow this type of transaction. Most commonly, credit card issuers provide cardholders with balance transfer checks to facilitate these types of transactions. There may be balance transfer fees involved, and interest may accrue depending on your credit card terms.
Get a Cash Advance
As another method to pay your mortgage with a credit card, you can get a cash advance at the ATM with your credit card. You’d then deposit the cash into your bank account and use the funds to make your mortgage payments. You could also consider using the funds to purchase a cashier’s check and then mailing it to your lender.
Going this route most likely means you’ll have to pay a cash advance fee, and interest on cash advances will accrue on your credit card with no grace period and often at a significantly higher rate than on your everyday purchases. Credit limits may be lower for cash advances as well.
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Use a Payment App or Digital Wallet
Increasingly many consumers now use payment apps called digital wallets – like Apple Pay, Google Pay, and Samsung Pay, among others – to store payment information so that they can make payments quickly and easily. These apps are common now for point-of-sale transactions of all kinds, so you may wonder if this is a way to pay your mortgage with a credit card. Some lenders might allow you to pay with a digital wallet, but they would still typically require that your payments come from a debit card or bank account, not a credit card.
Do All Mortgage Lenders Accept Credit Card Payments?
No, most mortgage lenders do not accept credit card payments directly from the borrower.
If you’re curious about why this is, know that paying debt with a credit card isn’t usually a financially responsible move. Mortgage companies likely don’t want the added risk when someone is paying for their home loan with credit vs. cash. Also, it can be expensive for lenders to accept credit cards, given that processing and other fees can take a bite out of every incoming amount of money.
Factors to Consider When Paying a Mortgage With a Credit Card
Before paying your mortgage with a credit card, consider the following.
Fees vs Rewards
Similar to those considering paying taxes with a credit card, many people may want to pay their mortgage with a credit card because they want to earn rewards. Since third-party services will charge you fees — or you’ll pay the fees charged directly by your credit card issuer for balance transfers or cash advances — you’ll want to make sure the value of the rewards outweighs what you’re paying in fees.
Remember, the fees may seem small, but they can quickly add up over time. Also, in many cases, rewards cards may only count certain transactions as eligible for rewards. Many issuers don’t consider balance transfers as qualifying transactions, for example.
The Cost of Interest
If you don’t pay off your balance each month, interest will start to accrue on your credit card — and credit card interest rates are typically much higher than your mortgage interest rate, even if you have a good APR for a credit card.
Additionally, if you go the cash advance route, these transactions may have higher credit card interest rates, and there’s no interest-free grace period.
Effect on Your Credit Score
If your credit card balance starts to get too overwhelming and you miss making the credit card minimum payment, it could negatively impact your score.
Even if you make on-time payments, having a high balance could affect your credit utilization, which is the ratio between your balance and your available credit. The higher your credit utilization, the more it could negatively impact your score.
Challenges You May Face When Paying a Mortgage With a Credit Card
One challenge with using a credit card for mortgage payments is the time it takes to do so. Any of the above-mentioned methods will take you some time and effort to complete successfully. That’s because it’s unlikely your lender will accept a direct credit card payment and you will instead have to use a workaround.
There are also the fees to consider — determining whether paying the extra charges and potentially a higher interest rate is worth it takes some careful calculations.
Limited Payment Channels
Even with a workaround, your options for paying your mortgage with a credit card are quite limited. Major vendors have stopped accepting credit card payments for money orders, so the most viable methods are probably using a third=party service or getting a balance transfer or cash advance from your credit card, all of which cost money.
Potential for Increased Debt
Since credit card APRs are typically much higher than mortgage rates, putting your mortgage payment on your credit card (even indirectly) will mean that you’re risking hefty interest on top of your mortgage payment. And, since cash advances and balance transfers are among your most likely options and those typically come at even higher APRs, using them to pay for your mortgage opens you up to even more debt.
Should You Pay Your Mortgage With a Credit Card?
Making mortgage payments with a credit card might possibly be a good idea if you’re looking for a way to earn more rewards or get some financial breathing room. However, given the downsides, such as high fees and the impact it may have on your credit, you may be better off pursuing other options first. Also keep in mind that using a credit card to pay your mortgage may trigger a higher cash-advance interest rate than your typical interest rate since you can’t pay directly.
Alternatives to Using a Credit Card for Your Mortgage
Here are several options you can choose from instead of paying your mortgage with a credit card. Let’s start with what to do if the situation is urgent.
• Consider mortgage forbearance: If you’re struggling with your payments and experiencing a significant hardship, you can contact your lender to see if mortgage forbearance is possible. This could allow you to temporarily stop paying or have your monthly payments reduced until you can get back on your feet.
• Seek help from a housing counselor: You can find a reputable housing counselor that’s approved by the U.S. Department of Housing and Urban Development (HUD) by contacting the Homeowners HOPE Hotline or using the housing counselor tool on the Consumer Financial Protection Bureau’s website. They could suggest options to help you manage your mortgage payments. You may have to pay a small fee for the service, but it could be more affordable than using a credit card to pay your mortgage.
Refinancing or Loan Modification
If mortgage forbearance doesn’t seem necessary yet, there are other options worth considering: refinancing and loan modification.
Refinancing involves replacing your old mortgage with a new one – ideally with terms that will make it more manageable for you. The new mortgage might have a longer term or a better interest rate, resulting in lower monthly payments. The downside is that you’ll need to pay closing costs and, usually, to get more advantageous terms, you’ll need a good credit score and a regular income.
If refinancing doesn’t seem like a good option for you, you could go to your lender and request loan modification – changes in the terms of your mortgage that will make it easier for you to make your payments. This could involve a longer term or a better interest rate, for instance. Your lender is not under any obligation to offer this option, but it’s worth asking.
Personal Loan or HELOC
Another option to help with your mortgage payments could be a loan. Both personal loans and home equity lines of credit (HELOCs) are flexible loan types that might help you manage your mortgage in the short term. A personal loan is typically available at a fixed interest rate for up to $100,000 or even more. It’s usually paid back over a term of up to 10 years. A HELOC is a revolving line of credit, usually with adjustable interest rates. You can draw out funds, up to a set amount, during the initial draw period and during the subsequent repayment period, you pay back what you’ve borrowed, with interest. A HELOC is secured with your home equity, so the interest rate is typically lower than it is with a personal loan, but if you don’t make your payments, your house is at risk.
The Takeaway
While you probably can’t pay your mortgage directly with a credit card, there are workarounds that are possible, as long as you understand what you’re getting into and are strategic about what you’re doing. Before you move forward with paying your mortgage with your credit card, make sure you weigh the fees involved vs. the rewards you could earn as well as any interest you could accrue and potential impacts to your credit. Understanding the pros and cons of this scenario is an important step in using your credit card responsibly.
Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
FAQ
Can you use a credit card to pay a mortgage?
Can you pay your mortgage with a credit card? Probably not directly, but you may be able to do so through indirect methods. Some of these include going through a third-party service, making a balance transfer, purchasing a money order using your credit card, or getting a cash advance. Each of these methods will come with its own set of fees and/or higher interest rates.
Can paying a mortgage with a credit card impact credit score?
If you end up with a high balance on your credit card as a result of your mortgage payment, it could negatively impact your score if you have a high credit utilization. Or, if you end up missing or being late on a payment (perhaps you’re struggling to make the monthly payments), then your score could also be impacted.
Are there fees for paying a mortgage with a credit card?
There will probably be fees, depending on how you use your credit card to pay for your mortgage. For instance, you may incur balance transfer, cash advance, or third-party fees.
What are the risks of using a credit card to cover mortgage payments?
You would likely need to use a workaround to pay your mortgage with a credit card, which can require some advance planning and time. And typically, the workarounds will either involve third-party fees and/or repaying your credit card company at a higher-than-usual APR. Building up debt in this way can also have a negative impact on your credit score.
Is it ever a good idea to pay a mortgage with a credit card?
It’s rarely a good idea to pay your mortgage with a credit card. If it’s an emergency and paying with a credit card is your only option, it’s likely better than defaulting on your loan. If you have a new credit card with a signup bonus spending threshold you need to reach within a short time period, it might be worth it to consider paying through a third-party service so long as you are sure you’ll be able to pay off your credit card swiftly.
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