HELP! How Can I Finance $150k for downpayment for Owner Financing

15 Replies

Please HELP ME!! I need to borrow $150,000 to fund the downpayment on a Primary Residence I want to buy.

The total purchase price is $400,000. The owner will finance the $250,000 at 3% over 10 Years amortized over 30 years with a balloon due at the end.

This home has $100,000 equity - easily comped at $500,000. This is a friend of mine - that is why it is such a good price - and she just wants out!

She needs the $150k to pay off her home.

Is there a way to borrow $150,000 using this house as collateral. I have researched this for weeks - and I can't find ANYTHING! 

Every lender says that they need to finance the entire home - and have no options to fund the downpayment only.

Or I need to already own it to do a Cash Out Re-Finance to pay her back. She wants paid at closing when we transfer the title.

We are already under contract.

I know there is a way to do this, I just can't figure it out!!

I am hoping for a 10-30 Year Arm / Fixed Rate - with an interest rate under 7%.

Is this possible?

My credit is about 720.

I am maxed on DTI at 55% - so a personal loan won't work.

Because all of my income is from rentals, my income does not qualify for traditional financing.

What am I missing?

I know there has to be a way?

MAHALO for helping me figure this out!!



If you have actual websites or contact information - that would be SOOOOO helpful! 

In short, no. Any lender is going to require a first mtg. You Might find a lender who would let you in with no money down, assuming your seller would take her $250k as a Second mtg, which of course wouldn't be wise for her.

You’re going to get suggestions to propose a sub2/ wrap mtg for the whole $400k...again, not smart for the seller.

How much Do you have to put down?

Originally posted by @Craig Jeppesen :

You will need a partner or access to equity in another property, or a private loan, but no one will want to be in second position. If you didn’t have a dti issue you could do a hard money loan and then refinance in 6 months. 

 Great Idea Craig!

I think I could get the money with a short term Hard Money Loan - but how would I go about re-financing it in 6 months.

Again, if I only wanted to re-finance the $150k and not the entire loan?

I think you might be on to something!!


...I could access the money from a couple of other properties if I had to - it just seems so cumbersome - especially, since this property has so much equity in it to begin with.

And if at all possible, I would like to keep this property separate - and on it's own.

What kind of re-finance would I be looking at in 6 months?



Originally posted by @Wayne Brooks :

In short, no.  Any lender is going to require a first mtg.  You Might find a lender who would let you in with no money down, assuming your seller would take her $250k as a Second mtg, which of course wouldn’t be wise for her.

You’re going to get suggestions to propose a sub2/ wrap mtg for the whole $400k...again, not smart for the seller.

How much Do you have to put down?

 Aloha Wayne-

All of my money is tied up in other rental properties. - so I would need to 

cash-out refinance 2 other properties to come up with the $150k.

I have looked in to that... it just seems expensive and cumbersome. If at all possible - I would love to use the 100k equity in this property as part of the equation.

I feel like I have all of the puzzle pieces in front of me, I just don't know how to put them together yet....

I would LOVE any other thoughts that you might have?



Originally posted by @Stephen Akindona :

@Lisa Hall, difficult task to ask any lender to take a 2nd position on a primary residence. Primary residences have a totally different set of rules and regulations as to how you handle default and foreclosure. Wish I could offer more help!

Thank You Stephen!

If I need to, I can make this in to an Investment Property from the beginning. My husband owns the condo next door, as his primary residence. I was going to move in to one of the 4 bedrooms in this one - and run it as an Airbnb and be on property. I could, just stay in his condo if I needed to, and then Airbnb all 4 bedrooms. 

I am very flexible - I am just trying to figure out this rubik's cube in my best interest. 

If I did it as a complete investment property - what additional options would I have.

By the way... The current owner is only Airbnb'ing 2 of the 4 bedrooms and she is Cash Flowing the property!

Originally posted by @Eric Mayer :

I would look for a partner with some cash.


 Aloha Eric-

I have someone that is calling me daily to let him partner with me on this deal. 

I REALLY want to try to figure this out on my own. He wants a % of ownership, and a % of the monthly income.

Considering that this is already Cash-Flowing with Equity before I even buy it - I know that once I figure this (short-term) piece of the puzzle out- it will be my most lucrative cash-flowing property that I own.

I honestly feel like there is an answer out there - I just need someone that can look at this from a different angle - and help me find the out of the box answer.

In any other scenario, you are right, a partner would be the way to go. I just don't want to give up so much long term, for a short term situation.



@Lisa Hall , if you don't have the money you need to take it down, then you are forced to partner with someone on this deal! You can have equity partners of debt partners but you will have to partner. If you have someone that knows the details of the deal and wants to partner then, you need to explore this option. You don't have to give the farm away but 50% of something is a whole lot better than 100% of nothing. 

What percentage does the investor want of the deal to bring in the money?

You mentioned you want to buy the property as an owner occupied or a primary residence. With that in mind, you can not do a hard money loan on a primary residence, its illegal. 

That said, my suggestion is that you go get the scenario pre-approved as if you have been on title for 6 months, for a cash out refinance through Fannie Mae, also paying off some of your debt to get your debt ratio below 50% or less. Once you have that pre-approval, take it to your friend and show them that the scenario at that time under those conditions is pre-approved. Use that to help her feel more comfortable about putting you on title (she can stay on title with you, as a safety valve so to speak, in the event she needs to get you back off title). Once on title, wait out the 6 months required and then complete the Fannie Mae cash out refinance up to 80% LTV on a primary.

If that is not enough money to cover the whole purchase price of $400,000.00 plus any debts you need to payoff, then follow the 1st mortgage up with a HELOC for 90-100% as the remaining cash needed to cover all items. You can do the 1st and 2nd simultaneously.

Yes, the draw back is that she has to a wait 6 months, but during that time your making the payment to her, so it relieves some of the burden on her. The alternative is that she sells it to someone else that can buy it today. 

I hope this helps?

Originally posted by @Jason Smith :

@Lisa Hall

Have you considered a hard money loan for the home then refinance it after purchase. It wouldn't be at the 3% rate but at least you would be able to close the deal.

If this is her primary residency then, as previously mentioned, she cannot take out a HML on it. It's not legal. HMLs are for investment properties.