Seller Financing in Oregon: What's Allowed Today and What PROPOSED H.R. 6511 Would Change

4 days ago

6 min read

Seller financing is one of my favorite exit strategies to talk about with investors. You sell a property, the buyer pays you over time instead of a bank, and you collect interest on your own equity. For the right buyer and the right property, it can be a win for everyone.

But there's a catch that trips up a lot of Oregon investors: carrying a loan as the seller can make you a mortgage loan originator in the eyes of the law, and that takes a license. Oregon gives sellers a few exemptions, and they're tighter than many people expect.

On top of that, there's a federal bill, H.R. 6511, getting attention in investor circles. It's PROPOSED. It hasn't had a hearing or a vote. Here's what's allowed today for seller financing in Oregon, and what the bill would and wouldn't change if it ever passes.

Why do investors like it? A seller can often get a higher price, earn interest on the equity instead of cashing out all at once, spread out the tax hit in some cases, and reach buyers who can't qualify for a bank loan yet. Buyers get a path to ownership with a flexible down payment and faster closing. The risks are real too: the buyer can default, you may have to foreclose, and you carry the loan for years. All of that is manageable with good paperwork. The licensing limits are the piece people overlook.

How seller financing in Oregon works today

The Oregon rule is ORS 86A.203. It requires an individual to hold a mortgage loan originator license before offering or negotiating the terms of a residential mortgage loan, then lists exemptions. Two matter most for sellers:

Seller financing in Oregon under ORS 86A.203: residence exemption, three loans per 12 months, eight-loan cap — The two seller exemptions in ORS 86A.203 and the eight-loan cap that applies to both.

Your own former residence: an individual can offer or negotiate the terms of a residential mortgage loan secured by a dwelling that served as the individual's residence.
Investment property: as a seller, an individual can offer or negotiate up to three residential mortgage loans in any 12-month period secured by a dwelling the individual owns that didn't serve as their residence. A limited liability company can qualify too, if its members are the individual and family members as the statute defines them. The seller can't advertise or hold themselves out as being in the business of making loans.

And here's the part people miss. Anyone relying on either exemption may not hold more than eight residential mortgage loans at any time. Loans held through a qualifying LLC count toward that total.

The Oregon Division of Financial Regulation's mortgage licensing FAQ says the same thing in plain language: up to three loans in a 12-month period, the eight-loan cap, and if you're over the limit, use a licensed mortgage loan originator to negotiate the terms.

A quick example

Say you've sold two rentals with seller financing this year and you still hold six older seller-carry notes. You're inside the three-per-12-months limit, but your total is eight. A third sale this year would put you at nine, over the cap, so that deal needs a licensed mortgage loan originator to negotiate the terms.

The federal layer

Federal law has its own seller rules. Under the Truth in Lending Act definition of mortgage originator, 15 U.S.C. 1602(dd)(2)(E), a person who provides seller financing for the sale of three properties or fewer in a 12-month period is currently excluded, but only if the loan is fully amortizing, the seller documents in good faith that the buyer can reasonably repay, the rate is fixed or adjustable only after five or more years, and the seller didn't build the home in the ordinary course of business.

The federal S.A.F.E. Mortgage Licensing Act, 12 U.S.C. 5103, sets the national framework that requires loan originators to be licensed or registered. States like Oregon implement it through their own laws, which is why ORS 86A.203 is the rule you actually work with day to day.

and now a couple shameless plugs.

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Want a stronger handle on the landlord side of any property you keep? RPM Education offers Oregon landlord classes.

What PROPOSED H.R. 6511 would change

H.R. 6511, the Affordable Homeownership Access Act, was introduced in the U.S. House on December 9, 2025 by Rep. Andy Barr with Rep. Vicente Gonzalez as an original cosponsor, and referred to the House Committee on Financial Services. As of this writing, that referral is the latest action. There's been no hearing, no committee vote and no floor vote.

PROPOSED H.R. 6511 compared with current law: 3 seller-financed sales per 12 months today versus 24 proposed — H.R. 6511 is PROPOSED. It would change federal limits only.

According to the bill text, if enacted it would:

Add an exception to the federal S.A.F.E. Act for anyone other than a depository institution who extends credit on no more than 24 residential mortgage loans in a 12-month period, only on property they own.
Raise the Truth in Lending Act seller exclusion from three properties to 24 properties in a 12-month period, keeping conditions like full amortization, documented ability to repay, and a fixed rate or one adjustable only after five or more years.
Add a similar exclusion for owner-financed manufactured homes.
Require HUD and the Treasury to study owner financing of lower-priced homes.
Not apply to unrecorded contracts for deed or land installment contracts, lease options, or rent-to-own arrangements.

What H.R. 6511 would not change

This is the most important point for anyone doing seller financing in Oregon. The bill changes federal law. It doesn't rewrite ORS 86A.203. Even if H.R. 6511 passed tomorrow, Oregon's three-loan and eight-loan limits would stay in place unless the Oregon Legislature changed the statute, or the state adopted a rule under the authority ORS 86A.203 gives the Director of the Department of Consumer and Business Services to add exemptions when federal law requires or allows it.

So the bill is worth watching. It's not worth planning a pipeline of 20 seller-carry deals around.

Other Oregon rules to keep in mind

Interest rates: Oregon's 9% figure in ORS 82.010 is the default legal rate when the parties don't agree on one. It's not a cap on what you can agree to. For loans of $50,000 or less, the statute sets a usury limit of the greater of 12% or 5% above the Federal Reserve discount rate, with exemptions listed in the statute. Check it before you set terms on a smaller note.
Documents: use a promissory note with a trust deed, or a land sale contract, prepared or reviewed by a qualified professional and properly recorded.
Buyer qualification: even when you're exempt from licensing, documenting the buyer's ability to repay protects you and is required for the federal exclusion.
Fair housing: the same rules apply to who you sell and lend to as to who you rent to.

A seller financing checklist for Oregon investors

Count your seller-financed loans made in the last 12 months. Three is the limit on investment property.
Count every residential mortgage loan you currently hold, including through a family LLC. Eight is the limit.
Don't advertise yourself as a lender.
Structure the note to be fully amortizing with a fixed rate, or an adjustable rate only after five years.
Document the buyer's ability to repay.
Check ORS 82.010 on interest rates for smaller loans.
Over a limit? Bring in a licensed mortgage loan originator to negotiate the terms.
Treat H.R. 6511 as PROPOSED until it's actually law, and remember Oregon's limits apply regardless.

and now a couple shameless plugs.

Keeping some properties as rentals instead of selling? Northwest Real Estate and Property Management (NWRPM) offers full management for investors across the Portland Metro and Central Oregon areas.

And if you're a landlord, the Portland Area Rental Owners Association (PAROA) gives members Oregon landlord forms and support. For another investor angle, see our post on Oregon house hacking.

The bottom line

Seller financing in Oregon works today, within limits: your former residence, up to three investment-property loans in 12 months, and no more than eight loans held at once. H.R. 6511 would loosen the federal rules, but it's PROPOSED, it's sitting in committee, and it wouldn't change Oregon's statute on its own. Plan around the law you have.

This post is general information, not legal, tax or lending advice. Talk with a qualified Oregon attorney or licensed mortgage professional before structuring a seller-financed sale.