How to use this calculator
- Enter the agreed sale price and the buyer's down payment.
- Enter the interest rate written into the promissory note.
- Choose the amortization term used to calculate payments (often 15–30 years).
- If the note requires early payoff, enter the balloon year; otherwise leave it at 0.
- Review the payment, interest and balloon, then open the yearly schedule.
Worked example
A property sells for $250,000.00 with $25,000.00 down, so $225,000.00 is financed at 7.5% over 20 years. The buyer pays $1,812.58 per month and owes a balloon of $180,290.23 at the end of year 7. Total interest before the balloon is $107,547.35.
These are the default inputs above, so you can follow along.
The formula
The monthly payment uses the standard amortization formula:
M = P × r / (1 − (1 + r)−n)
where P is the amount financed (price minus down payment), r is the annual rate divided by 12, and n is the number of monthly payments (years × 12). At 0% interest the payment is simply P ÷ n. If you set a balloon year, the balloon equals the remaining balance after that many payments: B = P(1 + r)k − M[(1 + r)k − 1] / r.
Frequently asked questions
Is owner financing the same as seller financing?
Yes. The terms are used interchangeably: the owner (seller) lends the buyer part of the purchase price instead of a bank.
Can owner financing be used for land or a business?
Yes. Owner financing is common for raw land, rural property and small business sales, where bank loans can be harder to get.
Who holds the title in owner financing?
With a promissory note and deed of trust or mortgage, the buyer usually receives title at closing and the seller holds a lien. With a land contract, the seller typically keeps legal title until the contract is paid. See the land contract calculator for that structure.
Does owner financing show up on a credit report?
Usually not, unless the seller or a loan servicing company reports payments. Some buyers use a servicer so their payment history is documented for a later refinance.
Can I pay off an owner-financed loan early?
Only if the note allows it. Many notes allow prepayment without penalty, but you should confirm that in writing.
Related calculators
- Seller Financing Calculator
- Land Contract Calculator
- Down Payment & Closing Costs Calculator
- Printable Amortization Schedule