seller pays down for buyer

Can seller pays down payment for buyer?

I am planning to sell my condo to a person who is ready to buy but she has poor credit .She is able to have a cosigner for the Bank loan.

Can I pay her the 20% down for her bank loan.She agrees to increase the sale price to cover the down payment.
How does this work? and the procedure of doing so?

Thank you for your advice.
Austin 01

Sure, you can do anything that the two of you agree to do. The real question is will it work. I have never tried it, but in all of the loans that I have gotten, the lender wants to know where the down payment comes from. I feel that the lender will see exactly what you are doing and discount the down payment. If the price that you are charging is above what the property will appraise for, I would think that you have 2 chances of succeeding with your scheme, slim and none.


Most lenders will only allow seller to pay up to 6% of buyers closing cost. There are several down payment assistant programs available (Jeremiah, Nehemiah, or City Down Payment Assistance) that would allow the buyer to purchase with little to 0 down. Have your seller or you ask their lender about these programs.

The way to do this is with a seller carry back. The condo MUST have a good appraisal that will pass an underwriting review. Have her get an 80% first with you in second. You have to charge her interest and amortize the loan with her for 15-30 years depending on the lender requiremnets. Some lenders may have different requirements…ie, she has to have a minimum of $1,000 in the transaction. Al lenders are different so check the guidelines. Closing costs will still have to be addressed, you may agree to pay out of proceeds which will be around 4-6%.