According to you there is variation in rate of home owner and your contract and you also signed a contract for purchasing home. It is difficult to tell you that what should you do but I think you must consult with a real estate agent. It may be possible that their terms and condition will match to your situation and they can help you.

Home equity is the market value of a homeowner's unencumbered interest in their real property—that is, the difference between the home's fair market value and the outstanding balance of all liens on the property. The property's equity increases as the debtor makes payments against the mortgage balance, and/or as the property value appreciates.

It was last appraised at 68, 000. Should be more now as landscaping and and a few other renos have been completed since.

What is the home worth? if it were appraised today? Chances are a good agent could get you the mortgage . . no "money" down.
(P.S. I say that as I am an agent as well)

No one on this forum can answer that question because each lender has established their own policies in determining what constitutes a down payment or an equity investment in real property. When you are applying for a mortgage, take the contract with you and explain to the potential lender your situation. Their policies will dictate how they view your situation and whether they are prepared to grant you a mortgage.

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Educating one Consumer at a time

I have been in a private rent to own type of situation for the last 1.5 year. The home owner was asking 58,000 for the home. The owner asked if I would be willing to pay them directly for two years before purchasing the home (I am living in it now) and they would take all payments off the principal asking price at the time of official purchase. This contract was taken to a lawyer and legally documented, so this is not a concern for me.

The contract states that I will have to purchase them home for 45, 000 at the end of the two years or forfiet all money paid. However, I was wondering if a Mortgage Broker/Bank would consider the payments that I have made when calculating the down payment, or any consideration of those payments for any purpose? As I stated before, I do have legal proof of payments and the agreement.

Thanks