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 $300,000.00 with $30,000.00 down, so $270,000.00 is financed at 7% over 30 years. The buyer pays $1,796.32 per month and owes a balloon of $254,155.29 at the end of year 5. Total interest before the balloon is $91,934.30.
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
What is a typical interest rate for seller financing?
Rates are negotiated between buyer and seller. They are often somewhat above current bank mortgage rates because the seller takes on lending risk, but there is no fixed standard. Check your state's usury limit before agreeing to a rate.
How long are seller-financed loans?
Payments are commonly calculated over 15–30 years, but many notes require a balloon payoff after 3–10 years so the seller is not lending for decades.
How much down payment does a seller usually want?
It varies widely. Many sellers ask for 10–20% so the buyer has meaningful equity at stake, but the amount is fully negotiable.
What happens when the balloon comes due?
The buyer must pay the remaining balance, usually by refinancing with a bank or selling the property. If they cannot, the parties may extend the note or the seller may pursue remedies in the note and security instrument.
Is this calculator financial or legal advice?
No. It provides estimates for planning only. Have a qualified real estate attorney and tax professional review any actual deal.
Related calculators
- Owner Financing Calculator
- Balloon Payment Calculator
- Printable Amortization Schedule
- Seller Financing Income Calculator
Related guides
- How Seller Financing Works: A Step-by-Step Guide
- Seller Financing Pros and Cons for Buyers and Sellers