Serious question fatherin law helping with first home

[Juan Campos]

Hello guys my name is Juan this is my 1st year working as a contractor an I have  taken an interest in real estate investing however with no previous work history and no previous filed taxes I know I won't qualify for a loan until at least 2 years from now however my wife and I have ran numbers and we can save up to 20k in the next 10 months

however my father-in-law has offered to buy my wife and I a home 

by putting the down payment and getting us into a home 

I know I can afford  a 200k mortgage without being housepoor however my my father-in-law has offered  to buy the house under his name  this would be his secondary home he has a home already almost paid off he has had this home for the last 30 years ( he suggeated a heloc i said no) 

my question here is how can we go about doing this?

 In essence he will be putting in the down payment for this home using a conventional 3% down loan we will move into this home and pay for the mortgage but he will be the one doing all the paperwork however I want to be present  With my wife throughout this process can this even be done is it even legal? thanks in advance

[Steve K.]

Assuming that your father in law is going to buy the house in his name and rent it to you and your wife/ have you pay the mortgage, he will most likely have to put more than 3% down as it will be an investment property for him, not owner-occupied. There are some loan products that require as little as 10% down while 20-25% is more common for investment properties. This might not benefit you much if at all compared to renting because interest rates for investment properties are around 7% right now, so unless you find a GREAT deal, the mortgage will probably be more than you'd otherwise be paying to rent a similar property. You'd be paying more per month but wouldn't benefit from appreciation, tax benefits or principle pay down because only he owns the property. If he agrees to put your names on the house and buy the house together, then it's a different story and you'd stand to benefit even though the monthly payments could be higher than if you were to continue renting, because you'd get part of the appreciation, equity gained through principle pay down, and tax benefits. You'd also get a better interest rate and be able to put less down because you'd qualify for an owner-occupied loan. So I'd clarify with him exactly how it will work, and the 3 of you should sit down with a good lender and come up with the best plan that benefits everyone. One scenario to consider would be buying the house together, take title in you and your wife's name, while having him help with the down payment and co-sign on the loan. Then you could pay him back his portion of the down payment. Or maybe he would keep partial ownership. Or if that's not possible, he could buy it and then sell it to you with seller financing or subject to/ you could assume his loan or something like that. But yeah, sit down all together with a good lender and see what's possible as a starting point.