What is a Seller Carryback?

[Christopher Albritton]

As I understand it a bank will loan 80% to the investor directly, and then the seller takes out a 20% loan to finish off the remaining amount the investor couldn't muster up. Is this correct, and if so how would this work for a buy and hold property? I'm assuming I would be making two payments each month, one to the bank and one to the seller.

[Bill Gulley]

Seller carry back is the seller financing part or all of the deal. With conventional loans or any sane lender, they will require a buyer to have a down payment, most often (99%) wants 10% down or more. Bank does 75%, buyer has 10% down seller carries 15%. Seller might carry more and the lender may fund less, but the buyer will be in the game at 10% or more.

Private lenders may make low LTV loans with a seller carry that could reduce or eliminate the down, but this type of thing is rare, only mention it as someone might claim they did it trying to prove a point, like other aspects, if you can show you don't need the money someone might loan it to you. :)