Note Payment Calculator
Enter sale price, down payment, rate, and term to instantly calculate monthly income. Toggle balloon payments to see how shorter terms with lump-sum payoffs change your cash flow and total return.
How the Amortization Math Works
Owner-financed notes use standard mortgage amortization to calculate the fixed monthly payment. The calculator applies the same formula banks use: P = L[c(1+c)^n] / [(1+c)^n - 1], where L is the loan amount, c is the monthly rate, and n is the total payments. Early payments are mostly interest; as the note matures, more of each payment reduces principal.
- Down payment reduces the note amount — a 20% down on a $350K sale creates a $280K note
- Monthly rate is the annual rate divided by 12 (7.5% annual = 0.625% monthly)
- A 20-year amortization at 7.5% on $280K produces a $2,257/mo payment
- Year 1: roughly 63% of each payment goes to interest, 37% to principal
- By year 10: the split shifts to about 50/50 as the balance declines
Why Balloon Payments Matter for Sellers
Most owner-financed notes include a balloon payment — the full remaining balance comes due after a shorter term (typically 5-7 years), even though the payment is calculated on a longer amortization (20-30 years). This protects the seller from being locked into a long-term note while keeping monthly payments affordable for the buyer.
- A 20-year amort with a 7-year balloon means 84 monthly payments then one large final payment
- On a $280K note at 7.5%, the balloon after 7 years would be approximately $233,500
- Shorter balloon terms mean higher remaining balances (less principal paid down)
- The buyer typically refinances into a conventional mortgage to pay the balloon
- If the buyer cannot refinance, you may need to renegotiate or foreclose — factor this risk into your yield expectations
Sample Output
See what this feature calculates for you.
Explore More Features
See everything Owner Financing Note Calculator has to offer.
Seller Yield & IRR Analysis
See your true annualized return from carrying the note. The IRR calculation accounts for the timing of all cash flows — down payment, monthly payments, and balloon — giving you the real yield, not just the stated interest rate.
Learn more →Carry vs. Sell Comparison
Should you carry the note or sell outright for cash? Compare net proceeds from a cash sale against total income from carrying the note, including the time value of money. See exactly when carrying the note becomes more profitable.
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