Conventional Financing with Other People's Money

[Account Closed]

Been running into this issue, I am purchasing homes using funds from a partner, who is strictly providing cash and does not want to be hands on in the process. 

The issue is, conventional financing for investor homes does not allow for 'gifts' to be used on the down payment, so my partner can't simply give me the money for me to go take out a loan. To get around this, either:

1) I need to have the funds in my account 2 months ahead of time, so they can 'season' and I don't need to provide sourcing for the funds. This hurts our ability to move quickly.

2) I would need to add the partner to the loan, which we want to avoid.

What do you all usually do in these situations, where you want to use other people's cash and take out a conventional loan on an investor home?

[John Corey]

What is your relation to your partner? How are documenting their investment? Assuming you have already done a deal.

What if you and they somehow die or are otherwise unable to explain to a judge how the money should be split up? You and your respective families need a way to keep things clear. Though it is very unlikely anyone will die or become incapacitated, the lack of evidence is not good. If you create clear evidence, you need to be very careful about what you do when you show assets and liabilities on the loan application. Implying the funds are yours when you know they are not could be a crime.

Lenders are trying to understand the risk before they make a loan. If you have no money in the deal, why would you continue to keep the project on track if there is a market correction?