Help! My brain has gone on strike

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I have what I think will be a good deal in the making, but am having trouble finding a lender. Here's the deal. CA single family home appraised at around $300,000 seller willing to take $170,000 for it (just wants to pay off the bank) and willing to stay on as renter. Here's the problem: in order to make this work I would preferably have to bring the payments down to $1,000/mo or less, but the lowest I've been offered so far would be $1200/mo and the lenders want at least a 10% downpayment (which I don't have, wouldn't be willing to pay out of pocket anyway) I know this must be doable, but apparently creativity isn't my forte. I'm open to any and all ideas!!