After speaking with several first time home buyers this week , I feel the need to explain in more detail the role of the down payment in regards to financing a home.
The down payment the Seller is asking for when he/she lists their home with owner financing is not an arbitrary number. The money you put down has to be used by the seller to pay costs associated with selling a home. There are numerous costs that the seller must pay to complete the transaction such as, commissions to Realtors, Closing Fees, Title Insurance, Recording Fees, along with several other smaller fees. If the seller receives less than the sum of these costs, then he/she must bring money to the closing table to complete the transaction. If the seller receives more than the sum of the costs, then they are able to walk away with the difference.
There are several ways that a buyer can gain access to the home without having to pay all of the down payment at once, such as differed commissions, balloon payments, and additional principal reductions on a monthly basis.
Each sellers situation is specific to that property he/she is offering, so it is important to have the professional you are using to represent you (the buyer) determine the sellers motivation and needs.