Owner financing guide
Owner Financing Calculator for Payments, Balloons & Note Value
Owner financing, also called seller financing, can combine a down payment, financed balance, interest rate, amortization term, and an earlier balloon date. Model all of those pieces before the note is signed.
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Calculate the financed amount
Subtract the down payment and any cash received at closing from the sale price to determine the principal carried by the seller.
Choose the amortization term and balloon term separately
The monthly payment may be based on a long amortization period while the entire remaining balance becomes due much sooner.
Estimate the seller cash flow
The calculator can show periodic payments, total interest received before the balloon, and the remaining balloon payment.
Estimate what the note is worth at a target yield
If the seller may sell the note, discount the future payments and balloon at an investor target yield to estimate present value.
A note can amortize over 30 years while requiring a balloon after five years. The periodic payment is based on the 30-year amortization, but the unpaid principal after five years becomes the balloon balance.
Frequently asked questions
Is owner financing the same as seller financing?
The terms are commonly used interchangeably when the property owner or seller provides financing to the buyer.
How is an owner-financed payment calculated?
The payment is based on the amount financed, interest rate, payment frequency, and amortization term.
What is a balloon in owner financing?
It is the remaining principal that becomes due before the full amortization schedule would otherwise reach zero.
Can I estimate the value of an owner-financed note?
Yes. Discount the expected payment stream and balloon at the investor yield you want to test.