How owner financing is structured
The seller acts as the bank: you pay a down payment and monthly payments calculated on a long amortization (often 25–30 years), but the remaining balance is due as a balloon after a shorter term (commonly 3–10 years). You usually refinance or sell before the balloon date, so check that the property will appraise and qualify for a conventional or DSCR loan by then.
Balloon = loan × (1+r)k − payment × ((1+r)k − 1) ÷ r, where r is the monthly rate and k the number of payments made.