What to say to martgage broker when you...

Question

Im in negotiation with my current landlord to buy.

I want him to finance the down payment. Traditional financing for the remaining 90%.

Do I explain this to my mortgage broker? They keep asking about “where are the funds for the down.”

Any guidance would be appreciated.

Charlie MacPherson · Answer

@Nicholas Field  Whatever you tell your lender, be sure that it's both true and complete.  Otherwise you run the risk of being charged with mortgage fraud, which is a felony.

There are two commonly available $0 down loans out there:  VA (for veterans with a valid DD214) and USDA.

USDA Rural Development loans/loan guarantees are available for areas with a lower population density.  They interpret "rural" very loosely, so you might be surprised at what areas are eligible.  There's a map here, where you can verify eligibility: https://eligibility.sc.egov.us...

USDA property appraisals are pretty strict with regard to condition, just like a VA or FHA appraisal.

There are also state housing programs that might help.  I know in Mass, there was a 3% down program that let borrowers finance that 3% with a low cost 2nd mortgage.  You might look into that as well.

Eric Johnson · Answer

If want to go conventional they won't allow that to happen. If that was possible, every buyer would have the seller finance the downpayment and come in with little to no equity.

You would be able to have the seller carry 90% if you come in with 10%. The seller would have a first position note at a 90% LTV at that point. It's up to negotiation. However, It doesn't work how you are picturing it in your mind.

Nicholas Field · Answer

Both actually. Its a home im currently renting that my business pays for. Its a 2nd home. (Or first depending how you look at it)

it would be my primary residence on my taxes.

Mark Stark · Answer

@Nicholas Field are you planning on buying this as an investment or to continue living in?

Zack Karp · Answer

@Nicholas Field if the seller is giving you a loan, that would be considered an unsecured loan, which is not an allowed form of down payment.  And a gift from a seller is not allowed either, unless it's a family member where you can do a gift of equity.   However, you can get a gift from a family member for your 10% down payment.

Your best action is to speak with a creative LO who knows what they are doing to help you navigate this within the lending guidelines.

Best of luck!

Nicholas Field · Answer

I could have sworn i heard a BP episode of a buyer doing this.

What to say to martgage broker when you...

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