Realtors have a saying, "buyers are liars" for a reason. But it doesn't matter what he tells the realtor. It matters what he puts on the loan application. Why doesn't he buy the house in partnership with his parents? Then it is not a loan of the downpayment. They are investing with him, which is the truth. In the meantime, you should get a separation agreement and separate out your half of the money. If this thing goes through this way, you are going to be called upon to sign documents at the closing. They will probably want your signature on the offer and on the mortgage. And if he keeps from them that he can't get that, he stands to lose the downpayment.
