An owner financing contract template is a ready-made agreement in which the seller finances the buyer’s purchase of a property. It is a good fit for buyers who do not want a traditional home mortgage. Fill it in online with the form below, then download it as a PDF or Word file, print it and sign it.
Last Updated: October 2026. This guide is reviewed and updated regularly to reflect current law. If you notice an error or outdated information, please contact us.
An owner financing contract is a tool that lets real estate buyers enter into a printable purchase agreement form with the provision that the seller will finance the purchase. This way, the buyer and the seller do not involve third parties such as bank institutions that traditionally provide financing to buyers willing to take out a mortgage.
A seller commonly establishes a higher interest rate than financial institutions’ mortgage rates. They might also set a balloon payment due after at least five years. Buyers who have credit problems or income that is hard to prove are good candidates for owner loans.
For example, imagine that a seller advertises their property for $300,000. A prospective buyer who wants to purchase the home is a self-employed artist who cannot qualify for a traditional mortgage.
They might decide to make a full-price offer and request the seller to finance the purchase with 15% ($45,000) down. The seller, provided that they don’t have a mortgage on the property, might decide to accept the offer requiring the buyer to sign a mortgage note.
The real estate purchase agreement will state that the buyer will have to pay the purchase price back in ten years at a 7% rate of interest with a balloon repayment at the end of the term. This way, the buyer can buy the desired real estate at a flexible payment schedule while the seller collects a bigger amount of money in the course of the finance period.
The example comes down to these terms:
There are three common types of owner financing, and each one fits a different home-buying need. The main differences are who sets the loan terms, whether the buyer already has a mortgage, and how the monthly payments are credited.
Along with the standard information about the buyer and seller, certain components should be included in every owner-financed loan. The sections below cover the length of the loan, the down payment, the interest rate and the type of repayment. Each one shapes the monthly payment and the way the loan ends.
The addendum to real estate purchase contract should indicate over what period the buyer agrees to repay the loan. The period is completely up to the seller – they might establish a 5, 10, or 20-year period or any other timeframe. The most common period is from 5 to 10 years.
The amount of money that the buyer has to pay to show their interest in the home is known as a down payment. The paid sum is applied toward the sales price, and the remaining sum of the purchase price is financed. For seller financing contracts, it is common to set a down payment at the level of 10%-20%. There is no minimum requirement, though.
As we have mentioned, loans financed by the owner typically imply higher interest rates than those offered by traditional lenders. It is connected with a seller taking on delinquency and default risk. A rate of interest is again completely up to the owner, but the average rates are 4% – 10%. One should always check their state usury laws regarding the maximum interest rate that can be charged on loan. it should be done before setting the rate of interest for a loan financed by the owner.
The document should also indicate the type of repayment:
Our online builder will help you fill out the form for the owner financing agreement in no time. All you need is to answer the set of questions and then download the document.
Have these details ready before you start:
Start with the name of the contract and its date. Then add the names, addresses, and contact numbers of both parties.
Next, add the legal description of the property.
Enter the price at which the buyer agrees to buy the property.
Enter the interest rate that applies to the financed amount each year.
This section should state the number of days that are given to the buyer to furnish the property owner with all credit, employment, and other financial information required by the latter.
The next section should set out the terms of the seller’s financing.
First, it should indicate what type of financing the owner offers: a balloon mortgage, a mortgage with a fixed rate, a mortgage with an adjustable rate, or a mortgage with interest only. The details of any chosen option should be specified in the contract.
Next, the contract has to indicate whether or all property taxes and liability insurance will be escrowed. If they are not escrowed, the owner will be expecting proof of payment within the contract-specified number of days.
Indicate whether or not a penalty will be imposed on the buyer in case they make an early payment before the last payment date.
Mention what will happen in case the buyer delays the payments. You might state that payment becomes due and might be demanded of the buyer immediately without any prior notice.
The contract should also have a paragraph about bringing changes to the document. It should say that any adjustments or modifications are valid only if they are in writing and signed by both parties.
Here, indicate which state’s laws will apply to this contract.
The signatures, names, and dates of both parties should finalize the contract.
The attached promissory note includes the important details about the loan. It should explicitly say that the borrower (buyer) promises to pay the lender (seller) the agreed amount at a specified rate of interest annually.
The promissory note should also include the repayment terms: the number of installments, how often they are paid, and the date of the first payment. Other information to include in the note is counterparts, agreement modifications, non-waiver provision, and the governing law. The promissory note should be signed by the borrower.
Owner financing works differently for each side of the deal. Buyers gain a path to a home without a traditional mortgage, while sellers can earn interest and close faster. Each side also takes on risks, so it helps to weigh both before you agree to the terms.
Buyers get several benefits from a seller-financed mortgage, but there are also complications to weigh.
All the possible restrictions on the buyer’s ability to borrow money that are not presented in the list of available information should be made known to an owner as well. It is especially relevant in situations when a buyer has just started a business, and they cannot qualify for a mortgage for several years.
Instead of asking in general terms, a buyer can bring a specific proposal. For example: “I offer to split the purchase price in down payment at X percent, owner financing for $XXX,XXX at X percent, amortized over X years with an X-year balloon loan.”
For sellers who are considering financing the sale of real property, here are some pros and cons:
It is an agreement in which the seller finances the buyer’s purchase of a property. The buyer repays the seller over time, usually with interest, instead of borrowing from a bank.
A balloon payment is a single large payment at the end of the loan. The buyer makes smaller regular payments first, then pays off the remaining balance when the term ends.
The seller and the buyer agree on the length. Many owner financing loans run for 5 to 10 years, and some sellers choose 20 years or another timeframe.
Gather these items first:
Select Create My Document, answer the questions in the online builder and save the result. You can then download the contract, print it and sign it. If you prefer the PDF, fill it in with the online PDF editor.
Many buyers and sellers ask an attorney to read the contract before they sign it. A second pair of eyes can catch missing details and unclear wording.
General information, not legal or tax advice.
