finance
seller financing
A transaction in which the seller provides some or all of the financing for the buyer's purchase instead of, or in addition to, a bank. Common forms include a purchase-money mortgage or an installment (land) contract. Seller financing can help buyers who do not qualify for conventional loans and may give sellers interest income, though it carries default risk for the seller.
- Exam tip
- A seller who takes back a mortgage creates a purchase-money mortgage. Seller financing may be subject to federal lending rules depending on how often the seller does it.
- Example
- A retiree sells her house for $400,000, receiving $80,000 down and carrying a $320,000 note from the buyer at 6% interest.
Related terms & state variants
Sources
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Last verified: 2026-10-23