Memorandum of lease and Option to purchase

[Sam Stout]

So I have a tenant, who is a really good friend whom I trust a lot.  I signed a memorandum of lease and option to purchase with him on a house I own.  He rents it out, it is not his primary residence.  The goal is for him to refi out after one year of paying mortgage payments directly to the current lender from his bank account.  He has also been paying me additionally, which has been going towards the purchase.  

Has anybody had experience with this? I think he has a lender lined up that is coaching him on all the appropriate steps but I want some additional insight. Our goal is that he can get the house with little $$ down because his tenants have been in there the entire time. I am aware his new loan will need to be at 75-80% LTV, but is it as simple as refi or is a complete new loan need to be originated?? Thanks