I plan to offer owner financing to others that can't get a loan.

Quote from @Jaycee Greene: Assuming you pay asking price, I'd estimate the down payment for something like that using a hard money loan (HML) would be around 40% of the purchase price and your monthly payment would be $2,600 with an interest rate in the low 7% range (probably need a 700+ credit score to get that).

In addition to conventional loans and FHA loans, if either you or your wife are veterans, the VA also has a rehab program.I'd be happy to discuss my rehab experience both as an investor and as a mortgage broker, and at least help you think through your options. 

In response to your original question, closing agents should handle private loans just like a bank loan. 

I currently work with investors who are looking to begin their portfolio in turn-key real estate and manage for them on the back end so they can still enjoy their everyday lives while having a resident in place paying down their loans. 

(Auctions and foreclosures can also provide great leads.)With $20K, hard money loans are a practical option, as they emphasize a property’s ARV over your financial history.

Most mortgage companies will not call loan due if payments are current but you do run that risk and need to be prepared to payoff or refi at a moments notice.

If you are moving from your SFR to another property, then you should be able to get a 5% down loan or even 3% if it's FHA.  25% is only if you won't be living in the property in my experience.

I doubt he'll be able to quality for a loan (VA) with just his income. 

I they accepted an offer of $118K from my brother but since he couldn't get the loan, we're starting over.