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We know a gentleman who owns (no mortagages) a house that he currently has listed with an agent for $165,000. He offered to rent us the home for $1100.00 a month, if we would consider buying it in a year. He then called and told us he preferred not to rent, but to sell it. We are currently not ready to purchase through a bank. We would like to offer to buy it from him through owner financing, but are unsure of what we should offer. We had thought to offer him the $7000.00 we have for a down payment, and make payments for up to 5 years, at which time we would get financing for the reminder owed.

Any and all info and guidance that you all may be able to offer here would be greatly appreciated.

Our offerings are as follows.....
1) $5000 to $7000 down payment.
2) Monthly payments of $1100 max.
3) Bank financing in 2 to 5 years

Is it possible that the owner would benefit from us giving him the downpayment, and us making monthly payments for say 24 months of $1000, with $800 of that monthly payment going towards the purchase price or down payment for bank financing (where as at that point we would have $19200(from monthly payemnts)+ $5000 (from original downpayment) to show the bank at time of outside financing.)

Thanks for any and all assistance you all may be able to provide.

Based on what you described you do not need owner financing, you should be looking for lease with an option to buy, which is what you have descried in the last paragraph.

Keep in mind that $800 credit out of $1,000 monthly payment is typically WAY out of line, but of-course would be very beneficial to you as a buyer. Sellers usually credit about 10-20% of the payment.

Thanks so much for your time and advice. We are definitely exploring all options. Hopefully something worthwhile will pan out soon. I have had great luck in finding various homes in this area with lease purchase and owner finance options available.

Thanks again!!

Please note-many banks-and more specifically FHA, will not allow a seller contribution that is that far above the nrom for the area. In other words, if the going rate for rentals in that area-for same house size, # of bedrooms, etc... is $1000, and you all pay $1100 in rent, then most banks will not allow more than what is paid above the going rate for rents in this particualr area as a seller credit. Anything above that would be an "inducement to purchase" and not allowed by most reputable banks-and FHA specifically. So be careful.

BTW-I am an FHA/VA mortgage underwriter.