Owner financing (also called seller financing) means you sell your home and act as the lender, collecting monthly installments with interest instead of a bank's cash at closing. ClozeEZ is listing and document software, not a lender or a law firm: an Arizona attorney drafts the note and deed of trust, and a licensed title company records them. Sellers do it to reach more buyers, earn interest income, and often sell faster and closer to full price. In Arizona it's typically documented with a promissory note plus a deed of trust recorded through a title/escrow company. It can be excellent, but the paperwork and a few legal rules have to be done right.
In a normal sale, a bank hands the seller cash and the buyer repays the bank. In owner financing, you cut out the bank: you deliver the deed to the buyer at closing and, in exchange, the buyer signs a promissory note promising to pay you over time. A deed of trust (Arizona's version of a mortgage) secures that note against the property, so if the buyer stops paying, you have a path to take the home back. You collect a down payment at closing and monthly payments, principal plus interest, for the life of the loan.
Most seller-financed deals still close through a licensed Arizona title/escrow company. Escrow clears title, records the deed and the deed of trust, and issues title insurance, exactly as in a cash sale. The only real difference is who the buyer pays each month afterward: you, instead of a bank.
Every seller-financed sale comes down to a handful of numbers you and the buyer agree on up front. Get these right and the rest is paperwork.
The core terms you negotiate
| Term | What it means | Typical range |
|---|---|---|
| Down payment | Cash paid at closing: your cushion if the buyer defaults | 10%–20%+ of price |
| Interest rate | What you earn on the balance; usually above bank rates for the flexibility | Often 1–3 points above market |
| Amortization | The schedule the payment is calculated on | Commonly 20–30 years |
| Balloon | A date the remaining balance comes due in full (buyer refinances or sells) | Often 3–7 years |
| Term length | How long you carry before payoff | Balloon date or full amortization |
A common structure: a solid down payment, an interest rate a point or two above bank rates, payments amortized over 30 years to keep them affordable, and a balloon in five years so you aren't waiting three decades for your money. The buyer builds equity and credit, then refinances into a traditional loan at the balloon and cashes you out.
Weighing owner financing as the seller
| Pros | Cons |
|---|---|
| Interest income on top of the sale price | You don't get all your cash at closing |
| Bigger buyer pool, faster sale | Risk the buyer stops paying (you may have to foreclose) |
| Potential installment-sale tax spreading | You must vet the buyer yourself |
| Sell as-is / hard-to-finance homes | If you have a mortgage, the due-on-sale clause is a factor |
| Terms are a selling feature buyers pay for | Servicing and bookkeeping each month (a servicer can handle this) |
The single biggest gotcha: if you still owe a mortgage on the home, your loan almost certainly has a due-on-sale clause that lets your lender demand full payoff when title transfers. Owner financing is cleanest when you own the home free and clear. If you don't, talk to a real-estate attorney before proceeding; a wrap-around or subject-to structure carries added risk that needs professional handling.
None of this is exotic; thousands of Arizona homes trade this way every year. But the documents and disclosure rules are exactly where a small mistake becomes an expensive one. Pay a few hundred dollars for professional drafting and you protect a six-figure asset.
Yes. Arizona owners can carry financing on the sale of their property. The deal is documented with a promissory note and a deed of trust and closed through a licensed title/escrow company. Federal rules (Dodd-Frank/SAFE Act) can add loan-originator and ability-to-repay requirements when you finance an owner-occupant, so have an attorney or licensed originator confirm how they apply to you.
Because the loan is secured by a deed of trust, you can pursue Arizona's trustee's-sale (foreclosure) process to recover the property, keeping the down payment and any payments already made. A larger down payment and a properly vetted buyer sharply reduce this risk, and a real-estate attorney should confirm the exact process for your note.
It's more complicated. Most mortgages have a due-on-sale clause letting your lender demand full payoff when title transfers. Owner financing is simplest when you own the home free and clear. If you still owe, talk to a real-estate attorney about wrap-around or subject-to structures and their risks before offering terms.
Most sellers use a licensed loan-servicing company. For a small monthly fee it collects the payment, applies it to principal and interest, tracks the balance, escrows for taxes and insurance if you want, and enforces late fees, giving you clean records without doing the bookkeeping yourself.
List your Arizona home free on ClozeEZ. A flat $200 Platform Success Fee is owed only if your home closes: no close, no fee, no percentage.
Informational only, not legal or financial advice. ClozeEZ is a software platform, not a real estate broker or law firm. Consult an Arizona attorney for legal questions specific to your sale.