Buying a luxury property without a bank happens more often than most agents let on. Multimillion-dollar deals close every month without a single mortgage application, appraisal contingency, or underwriter involved. The buyer and seller just agree on terms and sign.

One of the more common paths is owner financing, where the seller acts as the lender and the buyer makes payments directly to them instead of a bank. It sounds unusual until you realize how many sellers of high-end homes would rather collect steady interest income than take a lump sum and figure out where to park it.

Banks slow down luxury deals in ways that don’t apply to a median-priced home. Jumbo loan underwriting digs into every income source, every business entity, every asset transfer from the last two years. A buyer with complex income (business owners, investors, people paid in commissions or distributions rather than a W-2) can get flagged for months of extra documentation on a $3 million purchase.

Self-employed buyers run into this constantly.

Foreign nationals run into it even more.

Someone who just sold a company and hasn’t filed two years of tax returns showing that income yet? A conventional lender will often say no, regardless of the cash sitting in the buyer’s account.

Owner financing works differently. The seller sets the terms, the buyer and seller sign a promissory note and mortgage (or deed of trust, depending on the state), and payments go straight from buyer to seller on a schedule they both agreed to.

A few things make this option attractive on luxury deals specifically:

• Sellers with paid-off homes often prefer steady monthly income over a large one-time payment that creates a tax bill.

• Buyers avoid the jumbo loan process entirely, which can shave 30 to 45 days off closing.

• Terms are negotiable. Interest rate, down payment, balloon date, none of it is set by an underwriting matrix.

• Deals can close in as little as one to two weeks once both sides agree on terms.

The tradeoff is that not every seller wants to be a lender. It works best when the seller owns the property outright or has a small remaining balance, and when they’re comfortable holding paper for five to ten years instead of walking away with all cash on closing day.

On luxury properties, seller-financed down payments typically run higher than what a bank would require, often 20% to 35%. Sellers want enough skin in the game from the buyer that walking away from the deal would actually hurt. A $4 million home with 25% down means the buyer has $1 million invested before the first payment is even due.

These three structures get lumped together, but they work differently on paper and carry different risks for both sides.

A seller carryback is generally the strongest position for a luxury buyer since it transfers title right away, just like a traditional purchase. A land contract keeps the seller in a stronger position and can complicate things if the buyer wants to refinance or sell before the balance is paid.

Owner financing isn’t the only route around a bank. Buyers looking at seven and eight-figure properties have a few other options worth knowing about.

• All-cash purchase. The cleanest path when liquidity allows for it. No note, no lender, no appraisal contingency to worry about.

• Cryptocurrency conversion. Some buyers liquidate crypto holdings ahead of closing and bring cash to the table, though timing the conversion against a purchase contract takes coordination with a title company familiar with the process.

• Private or hard money lending. Faster than a bank, but rates typically run several points higher and terms are usually shorter, often 12 to 36 months.

• Portfolio loans from private banks. Available to buyers with significant assets under management at certain institutions, though these still involve underwriting, just a faster and more relationship-based version of it.

• Owner financing. Covered above, and often the most flexible option for buyers who don’t want to touch investment accounts or take on short-term private debt.

Each of these solves the “no bank” problem differently. Cash and crypto require the buyer to already have liquidity. Private lending and portfolio loans still involve a lender, just not a traditional mortgage bank. Owner financing is the only one on this list where the seller becomes the source of funding.

Would you hand a stranger a $2 million note and trust them to pay it back over ten years? Sellers ask themselves some version of that question before agreeing to finance a sale.

They typically want proof of income or liquid assets, even without a bank in the picture. A credit check, even an informal one, is common. Many sellers also want a larger down payment specifically because there’s no lender vetting the buyer on their behalf, so the vetting falls to them.

References help too. A buyer who can show a track record of paying rent or a previous note on time gives the seller more confidence than someone with no payment history at all.

Can any luxury home be purchased with owner financing? Only if the seller agrees to it. It typically works best when the seller owns the property free and clear or has significant equity, since most mortgage lenders won’t allow a subordinate seller-financed note behind their existing loan without permission.

Is the interest rate on owner financing higher than a bank mortgage? Sometimes. Rates are negotiated between buyer and seller, and can land above or below current market rates depending on how much the seller values the monthly income versus a fast, all-cash exit.

What happens if the buyer stops paying? The seller can foreclose, just as a bank would, since the note is secured against the property in most owner-financed deals.

Do buyers still need a title company or attorney? Yes. Title insurance, a properly recorded deed, and legal documentation of the note are standard practice even when no bank is involved.

Abby Shemesh is co-founder and Chief Acquisitions Officer of Amerinote Xchange, a nationwide mortgage note buying company that has purchased performing and non-performing notes since 2006. He has worked directly with sellers and note holders on thousands of transactions involving owner-financed and seller-carried real estate deals across the country.