What Happens to Homeowner's Insurance with Owner Financing?

Yes, you'll need homeowner's insurance — owner financing doesn't change that basic requirement of homeownership.

Why the Seller Cares About Your Policy

Since the seller holds a financial interest in the property until the loan is paid off, they'll usually require to be listed on the insurance policy, often as a loss payee or additional interest holder, to protect their stake if something happens to the home.

What to Include in Your Contract

Spell out minimum coverage requirements, who is responsible for the premium, and how proof of insurance will be provided to the seller on an ongoing basis.

Shopping for a Policy

You can shop for homeowner's insurance the same way you would with any home purchase — comparing quotes from multiple carriers for the best coverage and price.

Bottom Line

Homeowner's insurance is a standard requirement in owner financing, just structured to also protect the seller's interest.

Learn more about insurance requirements at ownerfinancedhomesforsale.com.

This article shares general educational information about owner financing and is not legal or financial advice. Consult a licensed real estate attorney or financial professional before entering into any owner financing agreement in your state.