You are paying the same exact rate of interest each year based on your outstanding balance.

Sounds like you are going with a Fannie/Freddie type loan based on the cap of 2%.  

If that doesn’t work, then on to another option.

If you find you are unable to raise the money for an all-cash purchase, switching gears to Fannie will only work if you have a LONG time to close in your PSA or have many extension options (which usually require more hard earnest money.)

Explore the possibility of doing liability insurance instead, if you don't have much equity it may be your best, and much cheaper option.  

I love algorithm based cost seg studies.

Seller will be taking a 30k+ loss with this route.325k with 50K down to seller, 3 years of payments $1600/month, and a balloon payment of 215k at the end of 3 years.Benefits to me: (1) 10k less downpayment, (2) with the conventional route, the loan would be at 228k after 3 years of payments, so I will gain additional equity with the 2nd option since I will owe 215k (presumably I will have to refinance at that time).Benefit to seller: she gets over asking price, 50K upfront and $300/month of cash flow.Does this offer and structure sound reasonable?

Quote from @Spencer Thomas: Quote from @Dominic Mazzarella: Quote from @Spencer Thomas: View report*This link comes directly from our calculators, based on information input by the member who posted.What do you all think of the deal and how I analyze it? 

I am local to Los Angeles - based in Orange County.A bit about me: I’m a civil engineer by profession with experience in local government.

ABL, which is the basis for HML/fix and flip lending, will have different criteria and different focuses than multi-year loans based on cashflow and borrower credit score (long term mortgages).