No down payment with "properly" written purchase agreement?

[Bryan Hudson]

Some time ago, better than 5 years now, I encountered a couple who claimed they avoided the down payment by often taking care of it in the purchase agreement.  

Their claim, was that they would get the seller to agree to what was tantamount to a phantom down payment, or write up the PA for more than the selling price to cover the LTV on the LOC, the HELOC or the mortgage.

I don't so much question the technique as I question the legality of it all?

[Bryan Hudson]

Originally posted by @Christopher Phillips:

@Bryan Hudson

Welcome to BP.

Could be anything really. 5 years ago.

You don't technically have to do a down payment if the seller agrees to it.

You can also ask the seller to pay for the down payment. Essentially, you would increase the purchase price to cover the down payment. It shows up as a credit on the closing. It's the same thing as rolling the closing costs into the loan.

It gets a little dicey if the property doesn't appraise.

 Thanks Christopher,

That clarifies it for me.  I do agree about the dicey potential of it all.