most home sellers willing to go 'contract for deed' usually aren't willing to be the bank for the duration of a 20 year mortgage, most contracts use a standard 15-20 year amortization schedule (principal & interest payments) to determine your monthly payment but call for a balloon payment to be made 3-5 years after purchasing.
in that 3-5 year period the seller is expecting you to pay the contract for deed & all utility bills right on time and therefore be able to attain a standard bank mortgage finally cashing him/her out.
Down payment:
yes sellers want a decent dp otherwise they could sell to anyone with a 'no money down' offering. don't be looking for miracles although it is still a funky housing market.
I bought on a contract for deed ('95) w/no money down like this. The property I was buying needed some work, roof, conforming well & other small improvements. I proved to the seller that I had the cash to make the fixes and arranged to make those improvements w/in the first year of the contract.
The typical contract for deed is used by seller & buyer both to assure a smooth transaction for a mortgage can be made as the balloon payment becomes due.
One serious drawback of the contract for deed is the speed with which it can be cancelled, usually 30-60 days after missing a payment the owner can revert the property back to themselves.
Bank mortgages have longer redemption periods. in Minnesota we have the 'Statutory redemption period' giving 6 months & 'Equitable redemption period' allowing 12 months for home owners to fix the default in their mortgages. You fall into one category or the other here depending upon the homes value against what is owed.
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) I and seeing stuff 10k-50k all over the country that are great properties.
