Using Seller Financing to Cover Down Payment for FHA Loan

[Michael Fundaro]

Hi All,

I'm negotiating with a seller of a 2 family. My situation is this: I am buying the property with my girlfriend as our primary residence. We have enough money saved to cover the down payment for an FHA 3.5% loan, with another $5K to put towards fees & closing costs. Closing costs will be about $10K, we asked for $9K from the seller to give us some cushion. They countered, keeping the price the same but offering no closing costs. Before asking for $5K back for closing costs, and before offering more to offset the seller credit, I thought about using a seller financed second mortgage to cover the down payment, freeing up our cash to cover all closing costs. The cash flow from the other unit (currently occupied month to month), plus our monthly income is enough to cover costs and the second mortgage. We get our house with more money in our pockets, the seller gets their full asking price (though a portion of it is paid over time).

So what I'm wondering is, what kind of angles can I work to persuade the seller to provide the second mortgage?  I understand negotiating is a very case sensitive subject, but it would be great if anyone could provide examples of what has worked for them in the past.

Thanks!  Also, this is my first post! So double thanks!

Mike