Does the seller ever pay the down payment?

Asked by Matt, Salt Lake City, UT Tue Jan 27, 2009

My fiance and I are able to qualify for a lot of house based on our income and my credit score. We would much rather buy a pre-built house than have to build a new one. The only thing that is holding us back is the down payment. Say someone is asking $275K for a house. As far as the seller is concerned, is there a difference between a buyer offering $255 for the house and a buyer offering to buy the house for $275, but to have the seller pay the down and closing costs? Might be a dumb quesiton, but what are you going to do?


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Lorie Gould, Agent, Duluth, GA
Tue Jan 27, 2009
Sellers have never been able to pay the down payment for the borrower; however, they have been able to participate in down payment assistance programs in the past which in essence was the seller paying the down payment.

There are no down payment assistance programs remaining. There are grant programs which provide assistance for those who qualify. And there are HUD homes (FHA Foreclosures) which you can purchase with $100 down. VA foreclosures allow you to do a VA loan on the VA foreclosures even if you are not a veteran. VA loans are 100%.

With FHA loans which now require 3.5% down, the 3.5% down can be gift funds from someone you know.

You could search for properties that have assumable loans which allow you to take over the existing loan if you qualify for a loan. Rates would probably be higher than you could get today and you would want to make sure it is a loan you want to assume. Chances are the homeowner has no equity so that could give you a zero down scenario.

You could find a home with owner financing but chances are they will want some money down.

No questions are dumb! To answer "what are you going to do"? Save...Save...Save... and keep clean credit.
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Texasmommy, Both Buyer And Seller, Dallas, TX
Mon Sep 21, 2009
I don't quite agree with Lorie about the assumable loans. I am trying to sell my house through an assumption deal (I have no equity), but the stupid bank is suspicious of every buyer that comes along. They think that everyone who who wants a country home (mine) with no down payment (which is the deal with an assumption) is out to defraud them somehow, or they think people want to buy them to use as rentals, which you can't do with an FHA-financed home. It's absolutely stupid. They'd rather have me keep making payments on 2 houses (that one and my current one) than let me transfer the loan to someone else.
1 vote
pearls of kn…, Home Buyer, Alloway, NJ
Sun Sep 20, 2009
I sold my home for 250,000. That was my asking price. The buyers could not come up with the required 20% down payment and an auto accident took their closing cash. We all thought doom! But their realtor and our lawyer said all I had to do was increase my asking price to include all their closing cost and at the time of closing I take my 250,000 and the rest went back to the buyers for closing.
1 vote
trosenb, Other Pro,
Wed Sep 27, 2017
can I put the buyers accrued rental income into an escrow account so they can use as down payment for a mortgage?
0 votes
Matt, Both Buyer And Seller, Salt Lake City, UT
Tue Jan 27, 2009
Thank you for the info! VERY helpful!
0 votes
Dallas Texas, Agent, Dallas, TN
Tue Jan 27, 2009
Luke is correct off his statement. Seller can make a contribution towards your closing cost(s) based on your lender approval. However downpayment no. Lender require buyer based on approval from 3.5% or more. Speak with mortgage broker and realtor determine how structure a winning sales offer on your behalf. Keep in mind you receive annual tax benefits.
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Luke Allison, , Asheville, NC
Tue Jan 27, 2009
No, there is nit much of a difference in those 2 scenarios. The seller would walk away with the same amount of funds and in the end (when the loan is paid off) you would be out of pocket roughly the same amount of money. The seller paying the closing costs simply delays that happening. However, down payments can no longer be paid for by the sellers so you would have to verify and come to close with 3.5% of the purchase price in funds.

If you have any questions, feel free to contact me.
Luke Allison
Flagstar Bank

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