There is no legitimate version of a seller-funded down payment. Sellers can fund closing costs and rate buydowns; the down payment must come from your own money or a documented gift. The prohibition is uniform. FHA bars any interested party, seller included, from funding the borrower's minimum required investment. Fannie Mae and Freddie Mac limit interested-party contributions to closing costs and prepaids, within program caps. And Congress banned seller-funded down-payment-assistance schemes in the Housing and Economic Recovery Act of 2008. What people usually have in mind is a seller credit, and those are allowed: a seller can pay toward your closing costs or buy your rate down, temporarily or permanently, within your loan program's contribution limits. Both reduce your cash to close and your payment. So when someone offers to 'cover your down payment,' the deal needs restructuring into a legitimate seller credit, and every contribution needs to be categorized correctly on the closing documents. A price and credit arranged to disguise a down payment as something else is a serious problem, so keep it clean and keep it labeled.