Posted by Stacy(AZ) on May 12, 1999 at 11:55:17:
The downpayment credit is in reality just an agreement between you and the seller that some amount of your monthly payment will be considered an installment for a down payment. Although it should be deposited separately from your “rent” payment to document it, it can still be used by the seller for any purpose, such as making payments on the underlying loan.
His payments are $750/mo.
You pay $600/mo for rent, $150 downpayment credit.
He deposits them separately, but uses the money to pay his mortgage payment. At the time you buy the house, the total of all the $150 payments you made up to that time are considered downpayment money.
This is what I was trying to get at with my original post.