Owner financing for the down payment

Good morning, everybody!

I have been lurking on these forums for a while now and I would like to say that the amount of knowledge I received about real estate is immense. I can tell people are experienced here.

I was wondering if anyone has ever structured a deal where the buyer finances the down payment and the seller gets a loan from the bank for the remainder?

It is a general question, but if you need more details, I will be glad to provide you with more information.

It CAN be done but most institutional lender will balk at you getting your down payment via another loan. They want you to “…have skin in the game…”


There are government entities that will secure the loan for first time home buyers, in which case the lender doesn’t have a problem lending 100% of value.

It depends on the type of loan and the requirements by the lender. Some loan programs limit the amount of seller contributions (FHA for example). Others limit how much of the down payment can be a gift.

If prepared properly, the seller could finance the 20% down payment as a secondary lien on the property. I am not sure if this would be written as a promissory note or a Land Contract. Again this would need lender approval.

Another option is to get a 80/10/10 loan. The bank finances 80% on a first, 10% on a second and the buyer brings 10% for the down payment.