20% Seller holdback to eliminate PMI

[Steve Sapowsky]

Can a seller hold 20% of the mortgage as the down payment if the property is not paid off? Could I offer the seller $40k higher than asking price and have that profit go into the deal as the down payment? Keep in mind the sellers are my parents and they are very open to helping me in any way they can. I really want to avoid PMI. Any other suggestions would be awesome. Thank you!