Structure an owner-financed sale in a few seconds. Enter the price, down payment, interest rate, amortization period and balloon date to see the buyer's payment, the lump sum due at the balloon, how much interest the seller earns and a year-by-year schedule of everything the seller collects.
Last updated:
Sale & down payment
$
% / yr
Owner-financed notes often price a bit above bank mortgage rates.
Note terms
years
Sets the payment size, e.g. 30 years like a mortgage.
years
0 = no balloon, the note is fully amortized.
Optional: seller's tax picture
$
Leave blank to skip the installment-method gain split.
$
Commissions, closing costs paid by the seller.
Enter your values to see the result.
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How to use the Seller Financing Calculator
Enter the sale price and down payment, as a percent of the price or as a dollar amount.
Set the note's interest rate and amortization period. The amortization period decides the size of each payment.
Add the balloon term, the year the remaining balance comes due, or enter 0 for a fully amortized note.
Optionally enter the seller's adjusted basis and selling costs to see the installment-method gross profit percentage.
Read the payment, balloon and interest income, then scroll to the yearly schedule and download it as CSV.
How a seller-financed note works
In an owner-financed sale the seller replaces the bank. Three numbers shape the deal:
Down payment: cash at closing. Sellers often ask for 10% to 30% so the buyer has real equity at stake.
Amortization period: the term used to size the payment. A long amortization (25 or 30 years) keeps payments affordable.
Balloon term: when the remaining balance comes due. A short balloon (3 to 10 years) lets the seller get the rest of the money sooner, typically when the buyer refinances.
The payment is L × r ÷ (1 − (1 + r)−n) and the balloon is the balance after the last regular payment: L(1 + r)k − payment × ((1 + r)k − 1) ÷ r, where k is the number of payments made before the balloon.
Example: a $350,000 sale with 15% down leaves a $297,500 note. At 7.5% amortized over 30 years the monthly payment is about $2,080. If the balloon is due after 5 years, the buyer still owes roughly $281,500 at that point, and the seller has collected about $108,800 in interest along the way.
Balloon remaining per $100,000 financed
Share of the original note still owed at the balloon date, for a monthly note amortized over 30 years.
Rate
Balloon after 3 yrs
After 5 yrs
After 7 yrs
After 10 yrs
5%
$95,344
$91,829
$87,945
$81,342
6%
$96,084
$93,054
$89,639
$83,686
7%
$96,727
$94,132
$91,147
$85,812
8%
$97,280
$95,070
$92,477
$87,725
9%
$97,752
$95,880
$93,640
$89,430
Tips for structuring the deal
Match the balloon to refinancing reality. If the buyer cannot qualify for a bank loan by the balloon date, the seller may face a default or a renegotiation.
Check the rate against the IRS applicable federal rate to avoid imputed interest on a below-market note.
If the seller still has a mortgage, look for a due-on-sale clause before offering financing.
Use a written note and recorded security instrument, and consider a loan servicing company to collect payments and send year-end interest statements.
Some US states and the federal Dodd-Frank rules limit how often a seller can finance owner-occupied homes without being treated as a loan originator; check local rules.
Frequently asked questions
What is seller financing?
Seller financing (also called owner financing or a seller carry-back) is when the seller acts as the lender. The buyer pays part of the price as a down payment and signs a promissory note for the rest, usually secured by a mortgage or deed of trust on the property, then makes payments directly to the seller.
How is the seller-financed payment calculated?
It uses the standard amortization formula: payment = L × r ÷ (1 − (1 + r)^−n), where L is the amount financed (price minus down payment), r is the annual rate divided by the number of payments per year and n is the amortization period in payments. A balloon does not change the payment; it only cuts the schedule short.
How is the balloon payment calculated?
The balloon equals the loan balance still owed after the last regular payment before the balloon date. With a 30-year amortization and a 5-year balloon, the buyer makes 60 normal payments and then owes the remaining balance in one lump sum, which is usually paid by refinancing with a bank or selling the property.
How much interest does the seller earn?
The seller's interest income is everything the buyer pays on the note minus the principal financed. It is highest in the early years, because interest is charged on the larger balance, and a shorter balloon means less total interest because the note is retired earlier.
What is the gross profit percentage in an installment sale?
Under the US installment method, the gain on the sale (price minus adjusted basis and selling costs) is divided by the contract price. That percentage of every principal dollar the seller receives, including the down payment, is reported as gain in the year it is received, while interest is taxed separately as ordinary income. Depreciation recapture and other rules can change this, so confirm with a tax professional.
Is there a minimum interest rate for seller financing?
In the US, a seller-financed note that charges less than the applicable federal rate (AFR) published monthly by the IRS can be treated as having imputed interest, which reshapes how much of each payment counts as interest for tax purposes. Many sellers set the rate at or above the AFR to avoid this.
Are my numbers saved or sent anywhere?
No. The calculator runs entirely in your browser. Your inputs are remembered only on this device so the page shows them again next time.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.