Seller financing continues to grow in popularity as banks tighten requirements. One question that many potential buyers ask is: “How much will I need to put down in a seller financed deal?”

In the current market, most sellers expect that buyers looking for financing will bring less cash to the table than required for a conventional loan. However, they are also concerned that a buyer without any financial stake in the property will bail if the value of the home continues to decrease.

Smart Money reports:

” In today’s market many banks have returned to asking for 20 percent down; offer less and you’ll probably have to pay for private mortgage insuranc, which adds up to half a percentage point to the loan. In seller financing, the buyer can put down less than 20 percent — without the PMI. Still, says real estate attorney Jon Goodman, of Boulder, Colo., “the buyer needs to have skin in the game — the more, the better.” Homeowners will typically want a down payment of at least 10 percent as protection against default.”

If you know where to look, it is possible to take over payments with nothing down. However, in most of these cases you’ll be asked pay more for the property than it’s current value.

See Also:

Seller Financing Guide

Seller Financing Step-by-Step

Tags | creative financing, down payment, Seller Financing