Seller-finance payment calculator

Price out an owner-financed note: the monthly principal and interest, the total payment with escrow, the late fee, any balloon, and how the balance falls year by year.

Amount financed: $162,000.00
Principal and interest: $1,188.70
Total monthly payment: $1,488.70
Late fee: $59.44
Payments: 60
Total interest: $63,335.09
Final balloon payment: $155,201.79

Amortization by year
Year	Interest	Principal	Balance
1	$12,911.10	$1,353.30	$160,646.70
2	$12,798.76	$1,465.64	$159,181.06
3	$12,677.13	$1,587.27	$157,593.79
4	$12,545.40	$1,719.00	$155,874.79
5	$12,402.70	$155,874.79	$0.00

Estimates only: not an offer of credit, a loan quote, or legal or tax advice. Rate, term, escrow and fee figures are your assumptions. Seller financing can be regulated by federal and state lending laws, so have a real estate attorney review any note before you sign it.

How a seller-financed payment is set

With seller financing the seller acts as the lender. The buyer signs a promissory note for the price minus the down payment, and pays it back monthly at an agreed rate. The payment is sized on an amortization period, often 30 years, so it stays affordable.

Many seller-financed notes do not run the full amortization. A balloon makes the remaining balance due after a shorter term, such as five or seven years, usually when the buyer refinances. The calculator shows that final payment, which includes the last month's interest and the whole remaining balance.

Escrow and late fees

If the seller collects property taxes and insurance with each payment, that is escrow, and it is added on top of principal and interest. The late fee here is a percentage of the principal and interest payment, rounded to the cent.

Where the math comes from

The payment and the schedule come from a faithful port of the amortization engine NoteHarbor uses to service notes, so a payment you quote here is built to tie out to the serviced note. The total payment and late fee come from the seller-finance math Deal Harbor uses for note terms. To carry a deal like this from offer to a serviced note, see Deal Harbor for seller financing.

Worked example

A seller agrees to sell for $180,000 with $18,000 down, so the buyer finances $162,000 at 8%. The payment is sized on 30 years, with a balloon due after 5 years. The seller collects $300 a month in escrow and charges a 5% late fee.

Principal and interest: $1,188.70 a month
Total monthly payment with escrow: $1,488.70
Late fee: $59.44 (5% of principal and interest)
Balloon at payment 60: $155,201.79
Interest paid over the five years: $63,335.09

Without the balloon, the same note would run all 360 payments and cost $265,929.98 in interest. The balloon is why most of the balance is still owed after five years. For the full path from offer to serviced note, read tracking seller-financed deals.

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Common questions

How is a seller-financed payment calculated?

It uses the standard amortization formula: the amount financed, the annual interest rate divided into monthly periods, and the number of months the payment is sized on. Escrow for taxes and insurance, if collected, is added on top.

What is a balloon payment in seller financing?

A balloon makes the remaining balance due before the note would otherwise be paid off. The monthly payment is sized as if the loan ran the full amortization, then the rest is due at once, often after five to seven years, when the buyer typically refinances.

How is the late fee figured?

Here it is a percentage of the monthly principal and interest payment, rounded to the cent. Late fee limits vary by state, so confirm the percentage with an attorney before you put it in a note.

Is seller financing regulated?

It can be. Federal rules and state laws may apply depending on the property, the buyer and how many notes you make. This page is general information, not legal advice. Have a real estate attorney review your terms.