I plan to deduct that amount from my profit on the deal, but I wasn't sure if I would need to submit some documentation to partner and to the IRS to ensure I do not have to pay income tax on his portion.

I want to say that everything I have bought I specifically had to sign off on what inspections I wanted and what I did not-in fact, I think it is part of the standard contract that most real estate agents use in Missouri.  

The payments tend to be lower than the PMI option and interest is tax deductible on your primary residence.

We're talking a $200K home, not something huge by area standards...  

What has me wondering if I'm seeing straight is the article linked below describing a radical easing of credit standards.  

It is safe option if you don't want to go with your standard white. 

From my direct mail list provider: 1% is definitely not standard outside of a webinar or specialty list.

Now it is not as good as a cash offer, but it is leaps and bounds better than than your standard preapproval.

Some contradiction in thinking here too, you need to make improvements to bring the house you're looking at up to the standards of comps being similar.

Optionees have a vested interest as they want to buy so they typically take much better care of a property than a standard tenant.