I have a Buyer who only qualifies for 90% of the loan amount. The lenders suggest that we look for a house that has 10% equity in order to take care of the remaining 10%. Isn't there an easier way to do this? It's hard trying to find a house that has at least 10% equity, nevermind somone willing to part with it. Any Suggestions?

In a market like this I think it would be reletively easy to find a house with a good chunk of equity in it. Look for the FSBO's and distressed sellers. Thats my take anyway.

I agree with Prodigy. The market is full of homes that are going through foreclosure and depending on where you are, you can even find properties at 8 cents to a buck! I'm not sure about the market in Tennessee, but it shouldn't be too different from the others.

just simply look into forclosures or pre-forclosures when your looking to obtain property with equity.

Thanks guys for the help, I don't know why I didn't think of going that route before.

Who is the Lender? Fannie Mae/Freddie Mac both require to use the Lesser of the Purchase Price or Appraisal as to determine LTV.

I would be very, very curious who is allowing your borrower to used the Appraised value over the Purchase Price.

RD used to permitt this, but HUD has been very critical of this prgram and most RD Lenders have (Or in the process) of fazing this program out...

This is correct. This lender may have a program that allows for a gift of equity from a non-family member but such a program would be very rare.

Generally speaking, if your client only qualifies for a 90% loan then he will have to have a 10% down payment. In many loan programs he will need to show the source and seasoning of the funds.

How well do you know and trust the credibility of this lender?

You could find a buyer who would be willing to carry a seller second as well. If your client is approved for 90% maybe he can qualify for 100% cltv throught the right lender. On another note, does your buyer have any reserves or gift fund from a family? What are there scores? With the right program they maybe able to get 100%ltv. I got a 510 mid approved at 100 ltv% with $600 down and 6% sc. The seller second option maybe harder to come by, although, you maybe able to find more homeowners willing to offer a 10% seller second.

Good Luck!!

I was going to recommend the same thing. When you search the MLS, look under "financing considered" and choose OWC (Owner Will Carry). Most sellers are willing to carry 10%, amortized for 30 years (for the sake of DTI (debt to income ratio) for the first loan), but due and payable in 5 years. I have seen sellers that were willing to carry from 15%-20%, depending on the interest rate (which the seller determines) and the down payment.