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Seller Financing Income Calculator

For sellers: how much interest and monthly income would carrying a note earn, and how does it compare with taking cash and investing it elsewhere? Taxes are excluded. Installment-sale tax treatment varies, so talk to a tax professional.

Show schedule / breakdown

How to use this calculator

  1. Enter the sale price and down payment you would receive.
  2. Enter the note rate, amortization and any balloon year.
  3. Enter what you could realistically earn on cash, such as a CD or Treasury yield.
  4. Review interest earned and the comparison of values at the same future date.
  5. Remember the comparison ignores default risk, taxes and costs.

Worked example

You sell for $300,000.00 with $30,000.00 down and carry the rest at 7% on a 30-year schedule with a 10-year balloon. You receive $1,796.32 a month and earn $177,251.44 in interest. If you reinvest everything at 4.5%, financing is worth $550,302.85 at year 10, compared with $470,097.83 for a cash sale. The advantage is $80,205.02, before taxes and the risk that the buyer defaults.

These are the default inputs above, so you can follow along.

The formula

Payments use M = P × r / (1 − (1 + r)−n). Financed value at horizon H (balloon or payoff month) = down × (1 + i)H + Σ paymentm × (1 + i)H−m + balloon, where i is your alternative monthly return. Cash-sale value = price × (1 + i)H. The difference is the financing advantage before taxes, costs and default risk.

Frequently asked questions

Is seller financing better than a cash sale?

It can produce more total income when the note rate is higher than what you could earn on cash, but you take on default risk and wait longer for your money.

How are installment sales taxed?

In the U.S., gain may be reportable over time under installment-sale rules, but there are many exceptions. This site does not give tax advice. Consult a CPA or tax attorney.

What if the buyer defaults?

You may need to foreclose or use contract remedies, which costs time and money. A larger down payment and careful buyer screening reduce this risk.

Can I sell the note later?

Yes. There is a market for private mortgage notes, but buyers usually pay a discount to the balance.

Should I use a loan servicer?

Many sellers do. A servicer collects payments, keeps records, issues year-end statements and can handle escrow.

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Disclaimer: Results are estimates for planning and education only, not legal, tax or financial advice. Real loan documents may use different conventions. Have a qualified attorney and tax professional review any actual deal.