I have the down payment, but can't get the loan

[Helen Lowery]

Hello Bigger Pockets,

A year and a half ago, I noticed that the house I'd rented for 5 years looked abandoned and overgrown.  I still had my old landlords number, so I called him to see if he would be interested in selling.  He said yes, and we negotiated a price of $85,000.  He lives out of state, and was ready to let go of the property.

I had a lawyer draft a lease option to give me some time to come up with a downpayment.  It was a 1 year lease with an option to buy at $85,000 at the end of the 12 months.  I would pay $600 a month and sublet the house for $900.  

During that year, I saved what I could to come up with a 20% downpayment ($17,000) plus about $5000 to close.  I was making progress, but wasn't saving fast enough to make the deadline.  I felt very grateful, when, in the 12th month, my father gifted me $27,000 from his inheritance from his father.  I thought ... this is it!  Home free.

However, what I didn't realize, is that Fannie Mae won't accept a gift as a downpayment.... and that put a grinding halt to obtaining the loan.  

Ok... I thought... how to move forward? I tried applying for a HELOC on my primary residence, but the electronic appraisal (has some fancy name... can't remember what exactly) came back too low for the loan.

I'm back at the drawing board and asking my more experienced BP community of investors what they would do in this situation?  Any suggestions on how to partner with the existing out of state landlord?  I don't want to let this fall through my fingers.

Helen Lowery

Williamsburg, VA