Need real advise on legalities of seller making downpayment

Need real advise on legalities of seller making downpayment

Thanks for all who can help me.

I am trying to find out what the REAL restrictions are for seller downpayment from equity.

I understand all the reasoning for mortgage lenders not wanting the seller making the down payment (inflated pricing, etc, etc). BUT if I have a home legitimately valued at $92k and has existing mort of $31K and the seller just wants me to buy it for what is owed, actually I am looking at buying for say $60k and the seller (wife's father) will give me the proceeds that come to him after sale. He wants to just rent it from us for his remaining years at reduced payment but wishes to give us the equity where we would basically payoff vehicles and outstanding debts. Can the full down payment come from the equity through raising the price if it is still at say 65-70% LTV? To a mortgage lender it would seem like it would be excellent since the loan to value is low and would become lower since the down payment would reduce the mortgage anyway. I understand if buying close to full value this would be subject to much possible shadier dealings but with so much equity to utilize it seems it would be good even for the lender. What are the actual (read "real life") limits to this sort of seller paid down payment scenario?

I am in TX if it makes a difference.
Thanks again for the help.


Check with an Attorney

It is probably not best to get legal advise here. Your best bet would be to check with a local real estate attorney. If you tell them you are a real estate investor and looking to do a lot of business in the future they should give you what you need to know for no charge!

I am not sure of the answer myself. I know there are options, the can pay closing costs. They could also take back a second mortgage to cover your down payment, some banks will do that for you also. One other piece of advise, you should find a good mortgage broker. They will have all kinds of creative ways to do "no money down" deals.


... Verses: 35 "but those who hope in the Lord will renew their strength. They will soar on wings like eagles; They will run and not grow weary, They will walk and not be faint." Isaiah 40:31 ...


perhaps you could get one of those short term loans the 24 to 48 hour variety and then when you close with the seller the seller would settle up with you after clsong

Simplified question

Okay so I guess I just put too much into my last question to make it understandable. Thanks to those who were trying to help.

Here is the simplified version:

Can buyer's down payment come from seller's equity when there is a lot of equity? If so, what forms could this take? I.E. carryback, larger mortgage amount, seller giving the proceeds of sale to me for it (how can that work since the Dwn Pmt comes first),etc.

Surely there are people here who have used seller's equity for down payment in some manner. This question is in regards to the fact that the typical restriction I see is seller can contribute only up to 6% and only for closing costs.

Hopefully this makes more sense.


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