Dad offering a loan for our down payment… what to do with it, or whether to even accept it?

My husband and I recently got pre-approved for a home loan, and the lender figured it with $ 0 down payment because we qualify for USDA/FHA (?) assistance (my husband knows the specifics).

Anyway, my dad has offered to loan us $ 10,000 to put toward a down payment. It would be a huge help, but I’ve used online mortgage calculators, and maybe I’m doing something wrong, but it seems $ 10k down hardly makes a difference (it’s a loan, not a gift, from my dad, so consider I’m paying him $ 100/mo for a while here).

All we have saved at the moment is the $ 1,000 that we plan to use as earnest money when we make an offer, so $ 10k would be a huge help.

The lender did say that for every $ 1,000 you put down, you probably take less than $ 10/month off your mortgage payment. So is it even worth taking my dad up on the offer, if we have to pay the mortgage, AND my dad $ 100/month (for 8 1/2 years)?

Just wanted to know what the advantages are to putting down such a sum of money as opposed to going with 100% financing like we originally planned. Would it help us get approved for a better interest rate or something like that?

I’m also considering taking him up on it so we can clear all of our credit card debt, that way our only “debt” is paying him $ 100/mo and not throwing away money on interest.

Which would be the better option, in your opinion?

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