I don’t deal with banks and mortgages, & I suggest you don’t either. Why put your credit at risk, or your bank account? There are plenty of other options.
To me, getting bank financing is a no-no.
I’d find a resident buyer (Lease Option-to-Buy, NOT rent) who is willing to put down 10k - 15k deposit. The resident buyer will have the option to buy at 100% in 12 months. If he wants to renew for another 12 months, the price goes up but you will split the equity, like so:
Market Value is $100,000 (begin).
Buyer has Option to Buy at $105,000 in 12 months.
Appreciation pushes it up to $110,000 by end of the year.
Market Value is $110,000 (end year 1).
Buyer renews 12-month Option at $110,000 (split equity)
Appreciation pushes it up to $120,000 by the end of the year.
Market Value is $120,000 (end year 2).
You know appreciation will push value higher and higher, & you can tell the resident buyer that you will split the equity IF he renews. By the end of year two he has a $110,000 option on a $120,000 house.
I don’t see a way to get cash at closing. The only suggestion I have is to find a Lease-to-Own tenant, and get a $10 - 15k deposit from him at the beginning, & then another $10k at the beginning of year two if he wants to renew.
If the property stops appreciating that is not a bad thing for you. The optionee will either buy the property out now or leave. If the optionee leaves, you made the option fee free and clear and keep any rent credits.
The smarter move is to build in appreciation into your contract. For example, making the purchase price go up 6% annually. Of course, you will want to use exact dollar amounts and not % numbers in the contract itself.
As to an option fee to charge, that depends on the home value and the market. If your home is say $200k and you try to charge 10-15k in my market, it will sit. A good option fee is 1-5%. On a 200k home, that would be $2-10k. In a hot market, the higher % can work easily. Also your monthly lease rate and sales price will determine your success.
It is easy to say, I will just charge 100%, but if it is a buyers market, you won’t get far, especially if your option fee is high. Of course, if you are charging 100% and your option fee is lower and your lease is moderate, things can happen. It is all about finding that perfect number blend with your current market.
You can get cash back at closing. When I do it I have a separate agreement between the seller and myself. A lot of sellers are happy to do this for the buyer. They can write it off as money to repair the property. Hope this helped.