Auto extension agreementsA list of reminder clauses to be used when seller agrees to finance; Subordinated agreement, Early pay-off discount, Substitution of collateral, First right of refusal, Principal mortgage clause, Interest only clause, Delayed payment terms, Seller option to buy back, lease back, Prime rate clause, Stutter clauseBeing ready to do business is a good place to start when getting into this wonderful profession.When you get the lead, be ready to close.Charles

It’s always credit and collateral.

OTOH, we put up our house as collateral (or, more accurately the bank owns the house), which the bank agreed to.

So the fact the mortgage is underwater is not a underlining factor, got it, and it is more about the collateral.

I asked the bank for the foundation repair money and 2k for collateral damage from the repair.

You might also consider any furniture or equipment of value either as collateral or to be given as part of the compensation.

Other than a first lien position on the property, which can be difficult in CA depending on LTV, do you use anything else for collateral?

One of the first things lenders will look at is the collateral.   

Furthermore, depending on the relationship of his family member that may lend on the project, he could possibly enter into a prohibited transaction.To me, a cleaner way of doing the transaction would be for you to pay cash for the property, use it for collateral, and have the IRA loan the money for the rehab in a 1st lien position.

But, as stated earlier, commercial loans are based on a case-by-case basis and if a borrower is strong enough or has other assets to use as collateral, then any lender might choose to allow a 100% loan.One thing specific to the original post, 25% not 30% would be the downpayment I would expect for this loan (not knowing more than I do about it).