Owner Finance / Refi

2 Replies

If you owner finance a SFR for a year then refinance it using conventional financing - will you still have to put 20-25% down? Assuming there is equity in the property? For example seller wants $90k / house is worth $110k. Convention lenders I have used require me to put 20-25% down to finance the house. If I was to set up Owner Financing. Sell price $90k ...$10k down interest only then refi the remaining $80k after 1 year. When I refi the $80k, will I have to put any money down because I own the property? Or will I just need to just pay closing cost?

@Nick Weidner In my experience, if you buy a property at a 20-25% discount of the market value, you shouldn't have to put any money down since it meets the LTV ratio that most banks are looking for. I have done this with several properties and haven't had an issues using this method. You may want to talk to you lender/s and find out what they will look for with a refinance, which can help you know what you need to do on the buying end so you don't have to put more cash into the deal at refi. Good luck!

Generally for a refi the LTV is based off the appraised value (assuming enough seasoning). So if there is enough equity, then you should not need to bring cash to the table.

With a seller financed deal you will want to make sure the title is in your name so that the lender can see you've owned it.  Otherwise they may consider it a purchase instead of refi and require the down money.

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