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Mortgage Down Payment Help

by Kristina
(USA)

My Dad owns the house that I have lived in for the last 13 years. He is ready to sell it and I want to buy it. I know I have a couple credit issues that I'm working on but my question is:

He wants $90,000 for it. I was thinking, for a down payment, since I just don't have that kind of cash....is there a way(if I could qualify), that I could take out a $120,000 loan - pay $30,000 for the down payment and he gets his whole amount for the house?

Sorry if that is a stupid question. I really know almost nothing about getting a home loan! I was reading in your website about the down payment gifting from family and didn't know if this played in somehow.

If there is another suggestion on how to go about buying the house I am renting from my Dad, I would love to hear it!

Thank you,
Kristina

=====ANSWER=====

Hi Kristina;

First off, let me say that there is never a stupid question when it comes to getting a home loan. As the buyer, you must know exactly what you are doing, how the mortgage process works and what your best options are.

So I congratulate you for browsing my site and asking questions.

Now I see that you have been renting from your father for what appears to be 13 years. Let's began with that thought.

If you have a rental contract, proof you have paid this rent for that long of a period of time, then you have a basis to begin with. If you do not have this contract and proof of payments, then you may need to get something together for this pupose.

In the contract, your father could have a clause where he credits you a portion of the monthly rent towards a down payment. For example, let's say your rent is $500 a month. He can credit you whatever amount he wishes towards a down payment. Maybe it would be $250 a month.

Over the past several years, you could have a good credit balance. Say for the last 3 years, it would be $9,000. ($250 x 36 months)

Now let's go on to the sale price of the house. You say your father wants $90,000. If the house could appraise for a market value of $99,000 then you could have a deal. The actual contract price of the house would be $99,000 with a down payment gift from your father of $9,000.

This will only work if the house appraises for more than the $90,000. If it appraised for say $120,000, then you can adjust these figures some or just use it as built in equity for your new home.

You said you have a few credit issues that you are working on. Depending on what they are, you may qualify for an FHA home loan. Read up on this loan program since it allows for gifting from a family member.

Also you may want to review my pages on assistance for first time home buyers.

I hope you find this information helpful and I wish you the best. From what I can see, you should be able to get this deal done if the house value is there.

Best Regards,

Jeff Ragan





Comments for Mortgage Down Payment Help

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Mortgage Down Payment Help
by: Marissa

I am so happy I visited this website and saw this question! I was just looking for the same information and came across your question. Now I know what to do! Thank you

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