Seller Finance Calculator
Calculate monthly payments, total interest, and amortization for seller-financed real estate. Supports balloon payment schedules.
About the Seller Finance Calculator
A seller finance calculator computes the monthly payment, total interest, and amortization schedule for a real estate transaction where the seller acts as the lender rather than a traditional bank. Also called owner financing or a purchase-money mortgage, seller financing is an alternative when buyers cannot qualify for conventional loans, when properties have unusual characteristics that banks won't finance, or when both parties prefer to avoid the time and cost of traditional underwriting.
In a seller-financed transaction, the buyer and seller agree on the purchase price, down payment, interest rate, term, and any balloon payment. The seller receives regular monthly payments instead of a lump sum at closing, earning interest income on the balance. The buyer gains access to financing that might not be available through conventional channels — often with less paperwork and faster closing. This calculator handles the full amortization schedule so both parties understand exactly what the payment structure looks like over the life of the deal.
Seller financing is especially common in: investment property sales, commercial real estate, farm and rural land, and transactions involving sellers who have paid off their mortgage and want to generate retirement income from instalments rather than investing a lump sum. The interest rate is negotiable between parties but typically runs 1–3% above current market mortgage rates to compensate the seller for credit risk and opportunity cost.
How Seller Financing Works
The structure mirrors a conventional mortgage: the buyer makes monthly payments covering principal and interest according to an amortisation schedule. The key difference is that the note is held by the seller rather than a lending institution. At closing, the buyer receives title to the property (in a seller-finance arrangement with a deed of trust or mortgage) or the title is held in escrow until the note is paid off (in a land contract / contract for deed structure).
Many seller-financed deals include a balloon payment — the remaining loan balance comes due after a set period (often 3–10 years), at which point the buyer refinances with a conventional lender. This allows the buyer to build credit or wait for interest rates to improve while making regular payments to the seller. The balloon balance can be substantial — enter the balloon due date above to see exactly what the remaining balance will be when it comes due.
Amortization Schedule for Seller Finance
The amortization schedule shows how each monthly payment is split between principal (which reduces the loan balance) and interest (which is income to the seller). In early months, most of the payment is interest — on a $225,000 loan at 7.5% over 30 years, Month 1 interest is $1,406 out of a $1,573 payment, with only $167 reducing the principal. By Month 180 (year 15), the split is roughly equal.
For tax purposes, the seller must report the interest received as ordinary income, while the principal payments represent a return of their cost basis. Buyers can typically deduct mortgage interest paid to an individual seller the same as they would deduct bank mortgage interest, provided the loan is secured by the property. Both parties should consult a tax professional to ensure proper reporting under installment sale rules (IRC § 453).