Finance category
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Seller Financing Down Payment Calculator
Seller financing lets a buyer purchase without a bank loan — the seller holds the note. Down payment sizing depends on what the seller needs for their own tax basis, any wrap loan behind, and their comfort with an LTV. This calculator helps both sides size a deal that protects seller principal, produces seller cash flow, and stays affordable for the buyer.
Minimum down payment
$230,000
Down %
51.1%
Seller note balance
$220,000
Monthly P&I to seller
$1,538
Balloon balance at term
$202,035
Cash-need down constraint
$230,000
LTV-driven down constraint
$67,500
Total seller cash required
$230,000
How the math works
Minimum down = the larger of (a) seller's total cash need (mortgage payoff + any additional walkaway cash) and (b) the LTV constraint (price × (1 − max LTV)). On a $450K purchase with a $180K underlying mortgage and a seller wanting $50K extra cash + 85% max LTV: cash constraint = $230K, LTV constraint = $67.5K. The binding number is $230K (51% down) — the seller's underlying mortgage and cash need dominate.
If that's too rich for the buyer, structure a wrap: seller keeps their mortgage in place, buyer pays the seller who pays the existing mortgage. Wraps reduce the cash need to just the seller's desired pocket cash — potentially a 15-20% down deal — but introduce legal complexity around due-on-sale clauses.
How to Use
- Enter purchase price and seller's existing mortgage balance (or 0 for free-and-clear).
- Enter seller's tax basis and any desired cash at close (beyond mortgage payoff).
- Set the proposed seller-note interest rate and term.
- The calculator sizes the minimum down payment to cover seller needs and shows monthly P&I to the buyer.
Frequently Asked Questions
How much down do sellers typically require?
Traditional: 10-30% down. 10% deals are common on single-family residential seller financing. Commercial seller financing often requires 20-35% because the seller doesn't want to be in a marginally-collateralized position. Free-and-clear sellers can accept lower down; sellers with underlying mortgages (wrap deals) need enough down to cover payoff or service.
What's a fair interest rate?
0.5-2% above conforming 30-year rates is common. Sellers justify the premium by skipping bank origination fees and giving the buyer a path around bank qualification. Above 3% over conforming, the buyer should explore a bank refi in 2-3 years.
Balloon or full amortization?
80% of seller-finance deals have a balloon (3-7 years). Sellers don't want to hold 30-year paper. Buyer has to be ready to refi before the balloon; if not, they lose the property. Full amortization to maturity is rare but best for buyer certainty. Negotiate a 7-year balloon minimum and a refi-extension clause.
What's the Dodd-Frank issue?
Dodd-Frank restricts private residential seller financing — sellers can't finance more than 3 properties/year to owner-occupant buyers without a Mortgage Loan Originator license. Commercial and investor-to-investor deals are exempt. Talk to a RE attorney before a SF transaction involving a primary-residence buyer.
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