How to use this calculator
- Enter the purchase price.
- Enter the bank loan as a percentage of price (its LTV).
- Enter the seller's second note as a percentage of price. The rest is the buyer's down payment.
- Enter rates, terms and any balloon on the seller note.
- Review the combined payment and combined loan-to-value (CLTV).
Worked example
On a $400,000.00 purchase, the bank lends 80% ($320,000.00) and the seller carries 10% ($40,000.00), so the buyer puts down only $40,000.00. The bank payment is $2,075.51 and the seller note is $382.26, for $2,457.77 in total. CLTV is 90.00%, and the seller note balloons at year 5 for $31,506.50.
These are the default inputs above, so you can follow along.
The formula
Bank loan = price × bank %. Seller note = price × seller %. Down payment = price − both. Each payment uses M = P × r / (1 − (1 + r)−n). LTV = bank loan ÷ price. CLTV = (bank loan + seller note) ÷ price.
Frequently asked questions
Will a bank allow a seller second?
Many lenders allow subordinate financing within limits on combined loan-to-value, and the seller note must be disclosed. Always tell the lender. Hiding a seller second can be mortgage fraud.
What is CLTV?
Combined loan-to-value: all loans secured by the property divided by its value or price. Lenders often cap it.
What position is the seller in?
Second position. If the buyer defaults and the property is foreclosed, the bank is paid first, so the seller's note is riskier.
Why would a seller carry back a note?
To close a sale when the buyer is short on cash, to earn interest, or to spread out the gain on the sale. Discuss taxes with a professional.
Can the seller note have a balloon?
Yes. A 3–7 year balloon is common so the seller is not tied up for the full amortization period.
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Related guides
- How Seller Financing Works: A Step-by-Step Guide
- Seller Financing Pros and Cons for Buyers and Sellers