Where to find a loan with no down payment (but 20% seller carry)

4 Replies

I have found a great deal off market where the seller is willing to carry back 20-30% of the mortgage - I only need to find a bank loan that is willing to loan the other 70-80%.  

My problem is that the first couple lenders that I've spoken to say that fannie and freddie won't take loans where there was a seller carry back and no down payment from the buyer.  It's seeming like it would have to be a portfolio lender who's willing to accept it.  

I've spoken to a couple who have said it's too aggressive for them. 

@Daniel Karbownik   welcome to the site.  If you're looking for specific lenders you will need to post in the Marketplace.  Sorry.

You cannot do this for conventional loans, so that option is off the table.

You might find a commercial lender (shorter terms, maybe balloons, maybe ARMs) who would do a 70/20/10 (bank/seller/you) sort of deal.  The interest rate will be higher for a deal like that because there's more risk.  I don't think you will find any who will agree to 70/30 or 80/20.  Lenders want YOU to have skin in the game.  

Your best option for financing if you want to buy this with little money down is the seller.  A 100% loan from them or some alternative such as lease/option or a contract for deed.

You might be able to find a lender who will do cross collaterization.  That is, you get 100% of this purchase, but they require a lien on some other property to give them more security.

Or, you might be able to borrow from another source.  That is, you borrow 10% from some other source, and get a 70/20/10 deal.  That last 10% is not secured by the property.  If that's disclosed and the lender agrees, that might work.  This would be loan fraud, though, to do it without the lender being aware of the borrowing of that 10%.  Lenders will typically have some statement you have to sign asking if any of the down payment is borrowed.  Again, for conventional, this won't work.   They won't allow borrowed down payments.  But a commercial lender might.

Welcome to BP!

You may find a hard money lender to fund the deal, conventional lenders will want skin in the game. A portfolio lender may give a loan to someone that can show they don't need the loan, that's a case by case and different basis, if you don't have the down, that won't apply to you but said to clarify.

Consider a Subject-to transaction, the seller might be willing. :)

@Jon Holdman  @Bill Gulley  

 Thanks for the welcome guys! I'm looking forward to utilizing and contributing to this community.

Jon - not looking for any specific lender, just anybody really to fund my deal.  The cross collaterization you suggested is a really creative interesting idea that I didn't know existed - learned something on my first day!  I would definitely be able to borrow 10% from a family or friend, but I wouldn't want to be dishonest about it, so I will see if any lenders are OK with that.  

Bill - I do not have the 20% down for this purchase price, which is why the seller carry of the 20 is so enticing to me, but also why a portfolio lender might not want to fund me.  

In any event - Jon & Bill - I suggested to the seller to do a 100% finance which would be ideal, but their issue is that they need SOME equity out of the property, just not all of it.  They have about 65-70% equity, and need about 40-50 out on the deal.  

Call every small bank and credit union in your area and ask... easy peasy.  I had a lender out in Utah that would do exactly what you described and I have heard of local lenders even doing 100%... you won't know til you start dialing.

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