FHA with another loan as a downpayment

[Simon Aristizabal]

Hello,

I have been a member of BP for a few months already. I have read tons of books. But I have yet to jump in and actually buy a property.

From all I have read and heard on podcasts etc, I realized that perhaps an FHA loan would be a great way to begin. Unfortunately I do not happen to have 3.5% laying around for a down payment, especially the amount needed for my area in Fairfield County Connecticut.

Due to that, I would need to come up with about $20k for a down payment on a small multifamily house. I just graduated from college last May and began working right away with a decent salary, but the usual debt and student loans are quite the pain in my pocket.

Because of that, I was thinking maybe I could try to get the FHA along with my mother who has a better credit and together we can probably get a higher loan amount to be able to go for a multi family. However, the down payment problem comes up again. Together we have about $13K saved up and well that is obviously not enough, plus those are our security funds in the case of an emergency. So if we use that money we got saved, then we would pretty much be out of cash in the case that something big comes up in the house once we get it.

We thought maybe we could borrow the down payment amount from my mother's boss whose has been very nice and helpful in the past in terms of money. We we talked to her and she agreed to lend us $15k for the down payment and we would pay whatever else remains. She knows that my mother is a very responsible payer and she is not concerned about that. We agreed to draft a legal document to store the loan in case something happens to either party.

Now, just today I read a similar situation here in the BP forums and someone mentioned that doing something like this would be fraud. I have always been a very correct person and I do not want to do something illegal.

I really want to move forward and buy my first property to get started in real estate investing and this is my current only option to go with. But, would it really be illegal for us to do it this way? Could i get some feed back, suggestions, ideas, advice with my situation please?

I would really appreciate some help, and thank you for reading this, i know it was a little long....

Thank you in advance!