What is the difference between an owner-financed loan and a conventional loan?

An owner-financed loan and a conventional loan are two types of residential real estate loans and they both have important differences. An owner-financed loan is a loan offered by the seller of a property, instead of a bank or other financial institution. The buyer and seller will agree on a payment schedule and the buyer will pay the seller directly. With an owner-financed loan, the seller may be more flexible in terms of down payment, credit history, and other aspects of the loan. On the other hand, a conventional loan is a loan offered by a bank or other financial institution. It is based on the borrower’s credit score and other proof of financial stability. A conventional loan usually requires a larger down payment and has stricter requirements, such as a minimum credit score. Overall, the main difference between an owner-financed loan and a conventional loan is who is offering the loan and what the requirements are. An owner-financed loan may be more flexible, but a conventional loan may have better rates and more security. In Missouri, both types of loans are subject to state and federal laws governing residential real estate.

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What is the difference between an owner-financed loan and a conventional loan?

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