Sell a Land Note With No Down Payment in Texas — What to Expect

If you sold land in Texas on seller financing without requiring a down payment from the buyer, you created a note that presents a specific set of challenges in the secondary market. Zero-down land notes are not uncommon in Texas — many sellers use no-money-down terms to attract buyers in competitive markets, move properties quickly, or accommodate buyers who have income but limited savings. While these generous terms may have made sense at the time of the sale, they create a higher-risk profile that note buyers must account for when they evaluate the note for purchase. The good news is that you can absolutely sell a land note with no down payment in Texas — the note has value and there are buyers for it — but understanding how the lack of a down payment affects pricing is essential to setting realistic expectations.

The central issue with a zero-down note is the loan-to-value ratio. When a borrower makes no down payment, the note balance at origination equals the full purchase price of the property, which means the LTV starts at 100 percent. From the note buyer's perspective, a 100 percent LTV means there is no equity cushion protecting their investment — if the borrower defaults on the very first payment, the buyer would need to foreclose and sell the property for at least the full note balance just to break even, and that does not account for the costs of foreclosure, holding, and resale. This risk dynamic is the primary reason that zero-down notes receive deeper discounts than notes where the borrower made a meaningful down payment.

This guide will explain how note buyers evaluate zero-down land notes, what pricing to expect, how seasoning and payment history can offset the down payment deficit, and what strategies you can employ to maximize the value of your note despite the challenging LTV starting point. Whether your note is brand new or has years of payment history behind it, the information here will help you understand your position and make the best possible decision about selling.

Why Down Payments Matter to Note Buyers

The Equity Cushion Concept

A down payment creates an immediate equity cushion in the property — the difference between the property's market value and the note balance. This cushion protects the note holder in two important ways. First, it gives the borrower a financial stake in the property that they would lose if they walked away, which creates a powerful incentive to continue making payments even during difficult times. A borrower who put $10,000 down on a $50,000 property is much less likely to default than a borrower who put nothing down, because the first borrower has real money at risk while the second borrower has nothing to lose by walking away.

Second, the equity cushion protects the note holder's investment in a foreclosure scenario. If the borrower defaults and the note holder must foreclose and sell the property, the equity cushion provides a margin of safety that helps ensure the sale proceeds cover the note balance plus the costs of the foreclosure process. With a zero-down note, there is no margin of safety — the property must sell for at least the full note balance to make the note holder whole, and any decline in property value or any foreclosure costs come directly out of the note holder's pocket.

The "Skin in the Game" Factor

Beyond the mathematical equity cushion, down payments signal borrower commitment in a way that monthly payments alone cannot. A borrower who saved and paid $5,000 or $10,000 upfront has demonstrated both the financial discipline to accumulate savings and the conviction that the property is worth that investment. These are positive indicators that suggest the borrower views the purchase as a serious, long-term commitment rather than a casual transaction that they can easily walk away from.

When no down payment was made, the buyer cannot draw these inferences about the borrower's character and commitment level. The borrower may be deeply committed to the property and fully intend to make every payment, but the absence of a financial stake at the outset makes it impossible to confirm that commitment through the down payment alone. This is why seasoning becomes so critically important for zero-down notes — the payment history serves as a substitute for the down payment in demonstrating borrower commitment, and the longer and cleaner the payment history, the more effectively it fills that role.

How the Lack of Down Payment Affects the LTV Over Time

The good news for holders of zero-down notes is that the LTV situation improves with every payment the borrower makes. Each monthly payment reduces the principal balance, which brings the LTV ratio down from its initial 100 percent starting point. If the property has also appreciated since the sale, the LTV improvement is even more dramatic because the denominator of the ratio is increasing while the numerator is decreasing. A zero-down note that started at 100 percent LTV might be at eighty percent after two years of payments and appreciation, which represents a meaningful improvement in the risk profile.

This natural de-risking over time is the strongest argument for patience when selling a zero-down note. The LTV improvement, combined with the seasoning that accumulates during the same period, creates a double benefit that can dramatically improve your pricing if you wait. A note that might sell at a thirty-five percent discount with six months of history and a ninety-five percent LTV might sell at a twenty percent discount with twenty-four months of history and a seventy percent LTV. The math of time is firmly on your side with a zero-down note. For a detailed look at how LTV and other factors drive pricing, this resource on what determines note value in Texas provides comprehensive information.

Pricing Expectations for Zero-Down Land Notes in Texas

New Zero-Down Notes — Less Than Twelve Months

A zero-down land note with less than twelve months of payment history is among the most challenging notes to sell in the Texas market. The combination of no equity cushion and limited performance data creates a high-risk profile that only the most aggressive buyers will accept, and they will require a substantial discount to justify the investment. Discounts of thirty to forty percent are not uncommon for very new zero-down notes, and some buyers may decline the note entirely if the collateral or other factors do not compensate for the risk.

If you hold a new zero-down note and you do not have an urgent need for cash, the most financially sound advice is to wait. Every month of on-time payments simultaneously builds seasoning and reduces the LTV, and the pricing improvement from this dual benefit is particularly steep for zero-down notes because they start from such a challenging position. Six additional months of perfect payments on a zero-down note can improve your pricing by five to ten percentage points — a substantial improvement that is worth the patience for most sellers.

Moderately Seasoned Zero-Down Notes — Twelve to Twenty-Four Months

Zero-down notes with twelve to twenty-four months of clean payment history are in a much more marketable position than newer notes. The borrower has demonstrated a real commitment to the property through a meaningful period of performance, the LTV has improved through principal payments and potential appreciation, and the highest-risk period of the note's life has passed. Buyers will still apply a discount that reflects the originally high LTV, but the discount is typically in the range of twenty to thirty percent — significantly better than what a brand-new zero-down note would receive.

At this stage, the other characteristics of the note — interest rate, collateral quality, remaining term — begin to carry more weight in the pricing relative to the down payment issue. A moderately seasoned zero-down note with a high interest rate, strong collateral, and a good borrower can actually receive competitive pricing because the note's strengths compensate for the original down payment deficit. This is the range where selling begins to make financial sense for many zero-down note holders, particularly if they have a productive use for the cash.

Well-Seasoned Zero-Down Notes — Twenty-Four Months and Beyond

After twenty-four months of perfect payments, the absence of an original down payment becomes a less dominant factor in the buyer's pricing analysis. The borrower has built equity through principal payments, the property may have appreciated, and the LTV has likely improved to a level that provides a reasonable equity cushion. The payment history has established the borrower as a reliable performer, effectively substituting years of demonstrated commitment for the initial financial commitment that a down payment would have represented.

Well-seasoned zero-down notes with twenty-four or more months of history typically receive discounts in the fifteen to twenty-five percent range, which approaches the pricing that notes with modest down payments receive. At this seasoning level, the original down payment — or lack thereof — is just one factor among many, and a zero-down note with otherwise excellent characteristics can command competitive pricing. If you have been patiently building seasoning on a zero-down note and you are now at the twenty-four month mark or beyond, you are in a solid position to sell.

Strategies to Maximize Value on a Zero-Down Note

Build Maximum Seasoning Before Selling

This has been emphasized throughout this guide, but it bears repeating because it is the single most effective strategy for zero-down note holders. Time is your greatest ally. Every month of on-time payments reduces the LTV, extends the seasoning, and strengthens the payment history — all of which directly improve your pricing. If you can hold the note for twenty-four months of perfect performance before selling, you will be in a dramatically better position than if you sell at six or twelve months. The pricing improvement from this additional seasoning can easily amount to ten to fifteen percentage points of discount reduction, which on a $50,000 note translates to $5,000 to $7,500 of additional cash in your pocket.

Highlight Collateral Strengths and Appreciation

If the property securing your note has appreciated since the sale, that appreciation is one of the most powerful tools you have for offsetting the zero-down LTV concern. Research current comparable sales in the area and be prepared to share that data with the buyer. If the property has had improvements — a well, septic system, cleared building pad, fencing, or any other enhancement — document those improvements and communicate them to the buyer. Every dollar of collateral value appreciation reduces the effective LTV and supports a better offer.

The location and type of the property also matter. A zero-down note on a desirable lakefront lot in a growing market is a much different proposition than a zero-down note on a remote tract in a stagnant area. If your collateral is in a strong market, make sure the buyer understands the local dynamics — population growth, development activity, recent sales trends — that support the property's current and future value.

Consider a Partial Sale

Partial sales can be particularly effective for zero-down notes because they allow the buyer to purchase a shorter payment stream with less exposure to the long-term LTV risk. The buyer collects a defined number of payments and then the note reverts to you, at which point the LTV will have improved further through the additional principal payments the borrower made during the partial sale period. This structure reduces the buyer's risk, which typically results in a smaller discount on the purchased payments compared to a full sale. You can learn more about partial sale structures in this article on full versus partial land note sales in Texas.

Work With a Buyer Experienced in Zero-Down Notes

Not all buyers are comfortable with zero-down notes, and working with one who is unfamiliar with this structure can result in an unnecessarily low offer or a declined deal. An experienced Texas land note buyer like Longhorn Note Buyers has purchased countless zero-down notes over its nearly two decades in the market and understands how to evaluate them fairly. Longhorn looks at the complete picture — seasoning, collateral, borrower performance, interest rate — rather than fixating on the down payment alone. With over $46 million in Texas notes purchased and a 100% close rate on quoted deals, Longhorn has the experience and capital to make competitive offers on zero-down notes that reflect their true market value.

What If You Are Creating a Note Now and Want to Sell Later?

Structuring for Future Marketability

If you are about to sell land on seller financing and you are considering a zero-down structure, it is worth thinking ahead about how that decision will affect your ability to sell the note in the future. While a zero-down offer can help you close the land sale quickly, it creates a note that will take longer to reach its maximum market value and will always carry the stigma of its origination terms to some degree.

If possible, requiring even a modest down payment — five to ten percent of the purchase price — can meaningfully improve the note's future marketability. A ten percent down payment on a $50,000 sale is just $5,000, but it immediately establishes an LTV of ninety percent, gives the borrower skin in the game, and signals to future note buyers that the borrower was willing to invest their own money in the property. The improvement in future note pricing from this modest down payment can far exceed the $5,000 itself.

If a zero-down deal is the only way to make the sale happen, focus on the other note terms that affect marketability: set the interest rate as high as the market will bear (eight percent or above is ideal), use a fully amortizing payment structure if possible, ensure thorough documentation including title insurance, and maintain professional payment records from the very first payment. These steps will not eliminate the zero-down challenge, but they will ensure that the note is as marketable as possible given the LTV starting point. For guidance on structuring notes for future sale, this article on how to sell your land note in Texas provides helpful tips.

The Importance of Proper Documentation From Day One

Zero-down notes are already at a pricing disadvantage, and adding documentation deficiencies on top of the LTV challenge makes the situation significantly worse. If you are creating a zero-down note, invest in proper documentation from the start: use a professionally drafted promissory note and deed of trust, have the closing handled by a title company, obtain title insurance, and record all instruments in the county records. These steps cost a relatively modest amount at closing — typically a few hundred to a few thousand dollars — but they pay substantial dividends when you eventually sell the note by removing documentation concerns from the buyer's risk assessment.

Similarly, set up professional payment collection from the beginning. Whether you use a loan servicing company or collect payments yourself through a documented process, having a clear, verifiable payment record from payment number one is essential. The payment history is the primary asset you are building during the seasoning period, and any gaps or ambiguities in that record will cost you money when you sell.

Ready to Sell Your Note?

If you hold a zero-down land note in Texas and you are ready to explore your selling options, Longhorn Note Buyers can provide a free, no-obligation quote that gives you a clear picture of what your note is worth in today's market. Longhorn's experienced team evaluates zero-down notes regularly and understands how to weigh the down payment factor alongside seasoning, collateral quality, interest rate, and borrower performance to arrive at a fair and competitive offer. Whether your note is newly created or has years of solid payment history behind it, Longhorn can tell you exactly where you stand.

Call Longhorn Note Buyers today at (210) 828-3573 or visit longhornnotebuyers.com to get started. There is no cost and no obligation. If the timing is right, Longhorn can close your deal quickly and professionally with their 100% close rate on quoted transactions. If the timing is not right, Longhorn can tell you what your note might be worth in six or twelve months so you can plan your sale strategically. With an A+ Better Business Bureau rating and nearly two decades of Texas note buying experience, Longhorn Note Buyers is the partner you need for selling your zero-down note.

Frequently Asked Questions About Selling Zero-Down Land Notes in Texas

Can I sell a zero-down note if I just created it?

Technically yes, but the pricing on a brand-new zero-down note will be challenging. The combination of 100 percent LTV and no payment history creates a high-risk profile that requires a substantial discount, often thirty to forty percent or more. Most sellers find that waiting at least twelve to eighteen months to build seasoning and reduce the LTV through payments produces a dramatically better result. If you must sell immediately, focus on buyers who specialize in newer notes and be prepared for a deep discount.

How much does the down payment amount actually affect pricing?

The impact is significant, particularly for newer notes. A note where the borrower made a ten percent down payment will typically receive pricing that is five to ten percentage points better than an otherwise identical zero-down note. A twenty percent down payment improves pricing by roughly eight to fifteen points compared to zero-down. As the note seasons and the LTV improves through payments and appreciation, the gap between zero-down and down-payment notes narrows, but the original down payment remains a factor in the buyer's analysis throughout the note's life.

What is the single most important thing I can do to improve my zero-down note's value?

Build seasoning with a perfect payment record. Every month of on-time payments simultaneously reduces your LTV, extends your seasoning, and strengthens your payment history — the three factors that most directly offset the zero-down challenge. If you can achieve twenty-four months of flawless payments, your note will be in a competitive market position despite the original lack of a down payment. Nothing else you can do — no amount of documentation, collateral marketing, or buyer shopping — has as much impact as time and perfect performance.

Will a buyer require the borrower to have equity before purchasing my note?

Most buyers do not have a strict equity requirement, but they will evaluate the current LTV as a key factor in their pricing. A note that started at 100 percent LTV but has been reduced to seventy-five percent through payments and appreciation is in a very different risk position than a note that is still at ninety-five percent. Buyers generally become more comfortable and offer better pricing as the LTV drops below eighty percent, and notes that have reached sixty-five to seventy percent LTV are solidly in the comfort zone regardless of whether a down payment was originally made.

Is a partial sale a good option for zero-down notes?

Partial sales can be an excellent option for zero-down notes because they limit the buyer's exposure to the high-LTV risk while allowing you to access cash. The buyer purchases a defined number of payments over a shorter period, during which the LTV continues to improve through the borrower's ongoing principal payments. This reduced risk exposure typically results in a smaller discount on the purchased payments compared to a full sale. If you need cash but want to preserve the long-term value of your note as the LTV continues to improve, a partial sale provides an effective middle path.