Can You Borrow Extra on Your Mortgage To Pay for Furniture?

Determine if your decorating needs are worth the additional debt

Couple buying a couch at a furniture store
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Moving into a home from an apartment—or moving into a bigger home—can be equal parts exciting and expensive. When it comes time to furnish your new digs, you may be overwhelmed by the costs and wondering, “Can I borrow extra on my mortgage for furniture?”

It is possible to add the costs of furniture to your new mortgage, but is that the right way to go? Learn how to borrow extra on your mortgage if you need to, as well as other financing options.

Key Takeaways

  • You can borrow extra on your mortgage to cover additional expenses, including furniture.
  • Borrowing more money will increase the amount of interest you pay over the life of your mortgage loan.
  • Other options for financing furniture include credit cards, personal loans, home equity loans, and HELOCs.

How To Qualify To Borrow Extra on Your Mortgage

It is possible to borrow extra on your mortgage to cover expenses such as furniture, renovations, or closing costs. How easy it will be to bump up the amount you borrow will depend on your income and down payment amount. Generally, mortgage lenders won’t issue a mortgage loan unless the payments will be less than 28% of your current gross income. If borrowing extra on your mortgage pushes you past that percentage, you may find it hard to secure that extra amount.

You also risk having to pay private mortgage insurance (PMI) if borrowing extra makes it so you can’t afford to put 20% down. Adding the cost of PMI to your monthly expenses may not be feasible, and it can really add up over time, especially if it is required for the life of the loan. 

Some mortgage lenders will allow you to cancel your PMI once you pay down a certain amount of your home loan.

If you already have a mortgage and have begun to build equity in your home, you may be able to borrow extra money from your mortgage to pay for furniture by taking out a home equity loan or HELOC—both of which allow you to borrow against the equity in your home.

Pros and Cons of Borrowing Extra on Your Mortgage for Furniture

Pros
  • Can consolidate debt

  • Mortgage may have a lower interest rate than in-store financing

  • You can furnish your new home faster

Cons
  • You may pay interest for up to 30 years

  • Borrowing extra can lead to PMI

  • A larger down payment is necessary

Pros Explained

  • Can consolidate debt: Instead of taking on new debt such as a personal loan, you can consolidate the debt in a mortgage.
  • Mortgage may have a lower interest rate than in-store financing: You may save money by choosing to borrow from a mortgage lender instead of a furniture store.
  • You can furnish your new home faster: If you need furniture as soon as possible, it may be worth it to borrow more.

Cons Explained

  • You may pay interest for up to 30 years: The cost of interest added to a 30-year mortgage can increase how much you pay for furniture.
  • A larger down payment may be necessary: Adding furniture costs to a new mortgage increases the necessary down payment amount.
  • Borrowing extra can lead to PMI: If you can’t afford to make a 20% down payment with the addition of furniture costs, you’ll be subject to this additional insurance charge.

Should You Borrow Extra on Your Mortgage for Furniture?

If you’re unsure if you should borrow extra money on your mortgage to finance the cost of furniture, it can be helpful to crunch the numbers to see if this is a financial move you can afford to make. If you add these costs to your mortgage, your monthly mortgage payments will go up and affect your monthly payments. 

It’s important to remember that there are other costs that come with homeownership aside from mortgage payments, such as utilities, maintenance, property tax, and homeowners insurance. Make sure you can afford all of the necessities before you increase your mortgage amount.

Alternative Ways of Financing Furniture Purchases

If you decide adding the cost of furniture to your mortgage isn’t the way to go, here are some alternative options.

Home Equity Loans

If you can hold off on buying furniture, it may be easier to qualify for a home equity loan once you have built up some equity in the home. But be careful here because the equity you own in your home secures this loan. If you default on the loan, the bank can foreclose on your home.

HELOC

Similar to a home equity loan, a HELOC (home equity line of credit) is secured by your home and acts as a line of credit you can use to buy things like furniture. The benefit here is that you will only be responsible for the amount you borrow plus interest.

Personal Loan

A personal loan can be used to finance a variety of purchases, including furniture. You may find that once you’re settled in your home, taking out a small personal loan can help you buy furniture.

Credit Cards

You can also use a credit card to space out the payments for furniture. Credit card interest rates and fees can add up quickly, so make sure you have a plan in place for paying off your credit card balance in a timely manner.

Using a credit card with a 0% APR introductory offer can allow you to borrow interest-free for a temporary amount of time.

Budget and Save

If you can be patient or have time to plan ahead before buying a home, budgeting for furniture is a way to save money, because you won’t need to pay any interest or fees to borrow for it.

Do some furniture shopping online or in-store, but don’t purchase anything just yet. Get an idea of what it would cost you to furnish your home so you can start to create a budget based on your income. Then you can either slowly buy all the furniture you need bit by bit each month, or save up and buy it all at once.

Frequently Asked Questions (FAQs)

How much of a mortgage can I qualify for?

How much mortgage you can qualify for—and afford—will vary greatly depending on your income and your desired loan amount. You can go through the prequalification process with multiple lenders to get an idea of how much you may qualify to borrow before you start shopping for a home.

What are current mortgage rates?

Mortgage rates change all the time, so it’s best to research the current mortgage rates in real time. This helpful tool from the Consumer Finance Protection Bureau can give you an idea of what the average mortgage rates in your area are based on your credit score, loan type, home price, and down payment amount.

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