No. On a purchase, the loan is based on the lower of the price or the appraised value, so paper equity cannot substitute for cash down. Buy a $500,000 home for $400,000 and the lender sizes the loan off the $400,000 price. Coming in with no money of your own would make it a zero-down purchase, and among standard agency programs only VA and USDA offer that. (USDA is also the one carve-out that can lend against appraised value.) Conventional and FHA still require your real minimum down payment, and mortgage insurance is priced off your actual down payment against the price, with no credit for the built-in equity. The equity is real. You just reach it later, through a cash-out refinance with a new appraisal, and each agency runs its own clock: - Conventional generally wants the mortgage 12 months old and you on title for 6 months. - FHA requires 12 months of ownership and occupancy. - VA works off a 210-day seasoning requirement. So the discount you negotiated stays yours. It becomes accessible on the agency's schedule rather than at the purchase closing table.