Hi

I was wondering if any of you have experience in handling this situation, seems to be a common case.

I am in the process of purchasing an investment home. The seller is willing to offer the seller credit/concession in lieu of repair. The seller also has unpaid taxes which is common in my county (as the current year tax is paid the next year. I am taking a conventional loan under my personal name.

My lender thinks it is not advisable to take seller credit as the unpaid taxes is more than enough to cover the closing cost (loan fee, title, appraisal, escrow) and therefore instead have the purchase price reduced by that amount.

My question is, can the unpaid taxes applied towards the down payment amount?

If the unpaid taxes can be applied towards down payment, then I can still avail seller credit which I can use it towards the closing cost (loan fee, title, appraisal, escrow). I prefer to avail seller credit as oppose to taking a price reduction.

Example:

Purcase Price: $200,000
Loan Amount: $150,000
Down payment: $50,000
Closing Cost (Loan fee, appraisal, title, escrow (3 months of taxes & insurance)): $3500
Seller Credit: $3000
Unpaid Taxes: $3400

Is it possible to structure the loan as,

Down payment: $50,000 minus $3400
Closing Cost: $3500 minus $3000

Thank you