Owner Financing

Owner financing, also called seller financing, occurs when the property seller provides all or part of the financing to the buyer instead of the buyer obtaining a loan from a traditional lender. The buyer makes installment payments directly to the seller, often at an agreed interest rate and repayment schedule. Owner financing can benefit buyers who lack perfect credit or down payment funds and sellers seeking to expand the pool of potential purchasers. Risks include default and the need for the seller to foreclose if payments stop. Proper documentation—including promissory notes, deeds of trust, and amortization schedules—is essential to protect both parties.