Is it illegal to lie about a down payment?

I have the opportunity to buy a house for 120k. It appraises for 197k. I know personally the seller of the home. Are there any risks involved with telling the mortgage lender that the house is being sold for 135k and that I gave the owner of the house 15k down? I'm not sure if the guy has the house completely paid off or not. Would that make a difference?

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