Why seller-financing isn't the right strategy for this housing market

The good news for prospective home buyers is this: Interest rates are extraordinarily low, there's a lot of housing inventory to choose from, prices have come down and there's even an $8,000 tax credit available to first-timers.

The bad news is that as good mortgage rates are, getting a mortgage is a lot tougher than it used to be. Higher credit scores are required and the days of stated income loans are over. Unless you qualify for an FHA loan, there's also a good chance you'll need a 20% down payment.

Enter seller financing: If you can't qualify for a traditional mortgage, you may be able to find a seller willing to lend you the money to buy his house -- or at least carry a portion of the purchase price as a loan. This can help you avoid strict underwriting standards and it seems like a win-win: You get a house, they get a buyer, and you get financing and they get a stream of interest-bearing income.