I have done those deals. And some banks are still doing them. Usually smaller local banks. Make sure you present it to the bank with the sales contract. In fact, make sure you give the bank other supporting information such as how you plan to improve the property and increase rents. If you just show say you are getting 100% financing, banks are less likely to loan. Some will still do it, but most won't. But if you show how you can increase the value quickly, or how you have to put in your own money to fix it, the bank will be more open. It helps to have some real estate experience when trying to get these loans. My first deal like this, I already had 7 properties I was renting.
Additionally, you don't want to leave a bad taste in the mouth of the bank. If it gets all the way to closing and then they find out, you are in some trouble. Not only may you lease the funding, you lose future funding too.
Here is how my deals with this type of financing go. Meet with Mr. Seller to view the property. Ask Mr. Seller questions like how long he's had the property, why he's selling, what's he doing after he sells. This will give you clues to whether he can even do a Seller Carry Back. Let's say he's had it for 20 years and he's tired of managing. So, I ask Mr. Seller if I give a X dollars for the property (which is usually close to asking OR is asking price - assuming the numbers work), will you be willing to loan 20%, the remainder will come from the bank and/or me. Mr. Seller agrees. We sign two documents. One is the financing documents. Typically it is a shorter term note. The second is the sales contract, with the contingency that has approved financing from the seller and from the bank. That way if the seller decides he just wants to sell and not finance, you have a legitimate escape from the deal. Then you go to Mrs. Banker with all your supporting documents on why this is such a good deal. In a nice binder, I show Mrs. Banker the sales contract, the seller financing contract, pictures of the property, spread sheets showing the cash flow of the property, current tax returns, paystubs, expected repair costs, and a summary of my real estate experience (even if its just being a member of biggerpockets and your local REIA and the 2 books you read this year). Mrs. Banker is impressed with how prepaired you are and the numbers make sense. So she gives you an in house commercial loan. And you are on your merry way!
Another strategy I use more often (since I buy properties that need work) is to get credits from the seller. You may not get the whole down payment covered, but you can get a lot depending on the bank. Some banks limit seller credits to 6% of the contract price. Others will allow more. Usually credits are for major repairs like windows, roof, furnace, flooring.
Hope this helps. Good luck with your investing!
