Seller financing down payment - deal term ideas

[Kelly P.]

How do I structure the offer asking seller to finance the down payment?  

I qualified for a mortgage (excellent credit; solid W2 income), but don't want to use my own money for down on 2nd home. 

Seller has $175K mortgage (or less)

Offer full price $334,000

What is the structure of the 20% down payment financing?  (5 years, 5% non compounded, balloon, etc.)?

Do I have to ask permission from my bank? 

In case this matters: Seller also owns the other unit of the 2 unit townhouse and I'd like to buy that in the near future (I assume seller will want to sell once lease expires on 2nd unit)

[Spencer Cornelia]

@Kelly P. I went through a period where I was trying to figure out how I can grab properties with no money down.  It's a good thought exercise but I can't imagine getting a lender to approve of a scenario where a borrower is leveraged 100%.

"You're only limited by your creativity" - a quote that has stuck with me for a long time.

Based on the text in your post, it sounds like the seller has not received any kind of offer from you yet.  So we're starting from scratch.

I personally think you should present 3 offers.  The terms of the offers are completely up to you.

You mentioned that you have access to cash, HELOC, and have a solid w2 income. So I think you're in good position to present many offers to them and show that you're a qualified borrower in the event they provide seller financing.

You can still present a seller financing offer.  You will just prolong the need for a traditional lender to enter the picture.  If you like the deal at retail price, why not offer something like $5k down so they know you're serious and you take over the payments with a balloon in 10 years?  

First, I think you need to have a conversation with the owner figuring out if seller financing will even make sense to them.  If some big expense came up and they need 100% of their equity, then the mental gymnastics you're playing now don't matter since they won't be open to seller financing.  But if they're cool with getting their payout at a later date, then why not offer to take over the property and give them a balloon in 5-10 years for an agreed upon price.