Seller Financing Calculator
Enter the sale price, down payment, interest rate, and loan term to calculate the monthly payment and total cost of seller financing. Compare to traditional mortgage options.
Seller Financing
Calculate owner-financed home sale terms
Seller financing allows the buyer to make payments directly to the seller instead of obtaining a bank mortgage. The terms (down payment, interest rate, loan term) are negotiated between buyer and seller.
⚠️ Double-check important results. This is an educational estimate, not professional advice — and where it uses a rate, bracket or fee, those change over time. Verify anything you'll rely on, especially in legal, financial, tax or medical matters, and read our full disclaimer. Think a result is wrong? Tell us so we can fix it.
How Seller Financing Works
Seller financing (also called owner financing) is a arrangement where the seller acts as the lender, extending a loan to the buyer. Instead of the buyer obtaining a bank mortgage, the buyer makes monthly payments to the seller over an agreed term.
**Key Components**: - **Sale Price**: The total agreed-upon price of the property. - **Down Payment**: The upfront cash the buyer pays toward the purchase (typically 10-20%, but negotiable). - **Loan Principal**: Sale price minus down payment. This is the amount the "buyer" borrows from the "seller." - **Interest Rate**: The annual percentage rate (APR) applied to the loan principal. Rates are negotiable and typically 4-10%, depending on credit, term, and market conditions. - **Loan Term**: The number of months over which the loan is repaid (e.g., 360 months = 30 years, 84 months = 7 years).
**Monthly Payment Formula** (amortizing loan): - M = P × [r(1+r)^n] ÷ [(1+r)^n - 1] where: - M = monthly payment - P = loan principal (sale price - down payment) - r = monthly interest rate (annual rate ÷ 12) - n = total number of monthly payments (loan term in months)
**Total Cost**: Total paid = monthly payment × number of months. Total interest = total payment - principal.
**Balloon Payment Option**: Some seller financing agreements include a balloon payment-a large final payment due at the end of the term. This calculator assumes a fully amortizing loan (equal monthly payments until the loan is paid off).
**Benefits for Seller**: - May attract more buyers who don't qualify for traditional mortgages. - Earns interest income over the loan term. - Potentially faster closing than bank financing.
**Benefits for Buyer**: - May qualify when bank financing is unavailable. - Potentially more flexible terms negotiated directly with the seller. - May avoid some closing costs associated with traditional mortgages.
**Important**: Seller financing contracts should be reviewed by a real estate attorney to ensure proper legal documentation, including promissory notes, deeds of trust, and default provisions.
**This calculator provides estimates** based on the entered terms. Actual terms, rates, and legal requirements vary by jurisdiction and should be confirmed with a qualified professional.
- Amortizing loan formula
- Down payment and principal calculation
- Interest rate and term inputs
- Total cost breakdown
Worked Example
Example: Seller financing a home sale:
Sale price: $300,000 Down payment: $60,000 (20%) Interest rate: 6.5% annual Loan term: 30 years (360 months)
Step 1: Loan principal = $300,000 - $60,000 = $240,000 Step 2: Monthly interest rate = 6.5% ÷ 12 = 0.5417% = 0.005417 Step 2: Monthly payment = $240,000 × [0.005417 × (1.005417)^360] ÷ [(1.005417)^360 - 1] - (1.005417)^360 ≈ 6.943 (compounded growth factor) - Numerator: 0.005417 × 6.943 ≈ 0.03762 - Denominator: 6.943 - 1 = 5.943 - Monthly payment ≈ $240,000 × (0.03762 ÷ 5.943) ≈ $240,000 × 0.00633 ≈ $1,519
**Total cost**: $1,519 × 360 ≈ $546,840 Total interest: $546,840 - $240,000 = $306,840
**The calculator displays the principal, monthly payment, total cost, and total interest**, with the interest rate editable if market rates change.
Seller Financing vs. Traditional Mortgage
- **Seller Financing**: Negotiated terms, faster closing, potentially easier qualification for buyer, but seller carries the risk of default. Interest rate is negotiable. - **Traditional Mortgage**: Bank/ lender underwriting, stricter qualification, longer closing, but seller receives full payment at closing and has no ongoing risk.
**When seller financing makes sense**: - Seller wants a steady income stream (interest payments). - Buyer doesn't qualify for a traditional mortgage. - Seller wants to close quickly without bank delays. - Buyer and seller know each other or trust the arrangement.
**Legal consideration**: Seller financing agreements should always include a promissory note, deed of trust or mortgage document, and default/repossession terms. Consult a real estate attorney.
📊 Source & data. Formula and default values reference Bankrate Seller Financing. Last verified 2026-10-29. Rates, brackets and fees change over time — all editable fields accept your own current values.
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Open calculator →Frequently Asked Questions
Is seller financing legal?
Yes. Seller financing is legal in all 50 states, but the arrangement must comply with state real estate and lending laws. A promissory note and proper deed documentation are essential.
What down payment is typical for seller financing?
Down payments are negotiable but typically range from 10-20% of the sale price. Some sellers accept lower down payments (5%) to attract more buyers.
Can seller financing be used for investment properties?
Yes. Investors often use seller financing to acquire rental properties, especially when traditional financing is limited or when wanting faster closing. The terms are strictly negotiated between buyer and seller.
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