Is Owner Financing Right for You? A Tennessee Buyer’s Checklist
- willbaugher
- Aug 10
- 3 min read
Thinking about buying a home in Tennessee with owner financing? This alternative to traditional mortgages is growing in popularity—especially for buyers with less-than-perfect credit, self-employment income, or limited savings for a down payment.
But is it the right move for you?
Use this Tennessee buyer’s checklist to decide if owner financing is the right fit for your situation and what you need to prepare to close the deal smoothly.
🏠 What Is Owner Financing?
Owner financing (also known as seller financing) is when the seller acts as the bank and allows you, the buyer, to pay for the home in monthly installments—without going through a traditional mortgage lender. This arrangement can give you more flexibility, faster closing, and access to homes you may not qualify for otherwise.
✅ Tennessee Buyer’s Owner-Financing Checklist
Here’s what you should evaluate before moving forward with an owner-financed purchase in Tennessee:
1. Do You Have a Steady Income?
While owner financing is more flexible than a bank loan, most sellers still want to see that you have a stable income.
📌 Check if you can provide:
Pay stubs or tax returns (especially if self-employed)
Recent bank statements
Proof of rental history or past home payments
2. Can You Make a Reasonable Down Payment?
Most owner-financed deals in Tennessee require a 5%–20% down payment—sometimes more if your credit is poor (if the seller is running a credit report at all).
💡 Pro Tip: A larger down payment can:
Strengthen your offer
Lower your monthly payment or shorten your loan term
Show the seller you're serious
3. Do You Understand the Loan Terms?
Before signing, make sure you clearly understand:
💲 Purchase price
📆 Loan term (number of years)
📈 Interest rate (often 7%–10% in TN)
🎈 Balloon payments (common after 3–5 years)
🧾 Late fees, prepayment options, and default clauses
🤝 Escrow charges or if you pay taxes and insurance directly
If the terms sound confusing, consult a real estate attorney before signing.
4. Do You Know What Type of Agreement You’re Signing?
Tennessee allows several types of owner-financing structures, including:
Deed of Trust (most secure for buyers)
Contract for Deed (title transfers after full payment)
Lease-Option (rent now, buy later)
5. Have You Reviewed the Property Title?
Always ask for a title search before purchasing. Make sure:
There are no liens or unpaid taxes
The seller is the legal owner
You’ll receive clear title once paid in full (or immediately if using a Deed of Trust)
If there are any liens or loans that are remaining in place when you purchase (subject to)
6. Are You Comfortable Without a Traditional Lender’s Protections?
In a typical mortgage, the bank handles inspections, appraisals, and legal checks. In owner financing, it’s usually up to you to do your due diligence.
✅ Get a home inspection✅ Hire a real estate attorney (optional but recommended)
✅ Ensure the agreement is recorded in your local county
7. Do You Have an Exit Plan?
Some owner-financed loans in Tennessee include balloon payments due in 3–5 years. That means you may need to:
Refinance into a traditional mortgage
Pay off the balance in cash
Sell the home
Make sure you have a long-term plan for keeping or refinancing the property. Make sure that you will have enough equity in the home to be able to do so.
🟩 Who Should Consider Owner Financing?
Owner financing may be right for you if:
✔️ You’ve been denied a traditional mortgage ✔️ You’re self-employed or lack W-2 income ✔️ You’re new to the U.S. or building credit ✔️ You have cash for a down payment but poor credit ✔️ You want to move fast without bank delays
❌ Who Should Think Twice?
Owner financing may not be ideal if:
✘ You want the lowest possible interest rate ✘ You can qualify for a traditional mortgage
✘ You don’t have funds for a down payment ✘ You aren’t sure you’ll stay in the home long term
🔑 Final Thoughts: Is Owner Financing Right for YOU?
Owner financing can be a powerful path to homeownership in Tennessee—especially if traditional lenders have shut the door. But it’s not a one-size-fits-all solution. Use this checklist to evaluate your situation, ask the right questions, and prepare your documents.
📣 Remember: SEPFinancing.com specializes in connecting Tennessee home buyers and sellers using owner financing. If you’re looking for homes that offer this flexible option, you’re in the right place!
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