Seller contribution towards down payment?

[Josh Randall]

Is it possible to structure a deal where the seller contributes toward the down payment? For example, rental property purchase price is $30,000. Lender requires 20% down. Assuming the property appraises for $30,000 could a contract be written asking the seller to contribute $3,000 toward the down payment. I'm not talking about raising the selling price to $33,000. I'm talking about the seller walking away with a net of $27,000.

Please explain why or why not?

Thanks

[Jon Holdman]

Usually no. Lenders aren't that gullible. They know if the seller is contributing $3000 the real price is $27,000, not $30,000.

Now, sellers can sometimes contribute money toward closing costs. The lender may have a cap on that amount. 3% is pretty typical, or the actual costs, whichever is less.