Owner Financing

Owner financing and seller financing are interchangeable terms. The property owner (seller) acts as the lender, carrying a promissory note secured by the property rather than requiring the buyer to obtain a bank loan. The seller collects monthly payments (principal plus interest) over the note term. Owner financing is most common when the seller has no existing mortgage, has held the property long-term, and wants either tax-deferred income (installment sale treatment) or a higher effective yield than other investments. The term 'owner financing' is sometimes used in marketing and listings as an alternative to 'seller financing' to make the concept more intuitive for consumer audiences.