Seller finances the down for FHA ??

Question

Hi All, I am trying to structure a deal in my town to get started in REI. My question is would the banker go for a seller financing the 3.5 % down and going FHA for the rest. I am wanting to buy a duplex one side is already rented. This should cover the FHA loan. Owner is asking $120,000 for the property. We are prepared to offer the seller 8% on $4,200 paying off in 9 months. My question is...Is this a doable proposition? Will the Mortgage co go for it? Is it legal? What are the issues with my thinking? Thanks for the help. Dennis

Mark F. · Answer

@Dennis Standers

FHA won't allow the seller to finance the down. Gift funds are allowed, but they have to be from somebody that doesn't have a direct financial interest in the transaction. For more on gift funds, check out the following link (no affiliation):

http://themortgagereports.com/2669/downpayment-gif...

Dennis Standers · Answer

Thank you Joel and Mark. I can't seem to get the skin for the game. Know any way to get over the start up capital to be a REI? I will just keep saving money and see what happens. Thank you anyway, much appreciated.

Joel Owens · Answer

If it's FHA that is an owner occupied loan.

FHA does allow some gifts for the down payment from family members but not from a seller.

That is a loan plain and simple which alters qualifying for FHA. They underwrite based on 3.5% down. If you are essentially getting a 100% mortgage you have no skin in the game.