Partial Purchase Calculator

Unpaid Principal Balance (UPB) — current note balance, $

Enter a UPB greater than $0.

Note Interest Rate — annual %, e.g. 8

Enter a rate between 0% and 30%.

Remaining Term — months left on the note

Enter a whole number of months (1–600).

Payments Purchased (X) — how many front payments you buy

Must be a whole number from 1 up to the remaining term.

Investor Required Yield — annual %, your target return

Enter a yield between 0% and 50%.

Seller Discount Rate — annual %, to value the seller's tail today

Enter a rate between 0% and 50%.

Investor pays today (PV of 60 payments at 10%)

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Note's monthly payment	—
Total collected by investor (X × payment)	—
Investor discount vs. UPB	—

Seller's Residual (the tail)

Payments remaining to seller	—
Note balance at reversion (after X payments)	—
PV of tail today (at seller discount rate)	—
Total scheduled payments to seller	—

Split Summary

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Investor's Remaining Investment Balance

After Month	Payments Left	Investment Balance

Worked Example

Say a note holder owns a performing note with a $100,000 UPB (unpaid principal balance), an 8% annual rate, and 180 months remaining. You agree to buy the next 60 payments at a 10% required yield. Here is the math, step by step.

1Find the note's monthly payment. The monthly note rate is 8% / 12 = 0.6667% (0.0066667). With the amortization formula PMT = UPB × i / (1 − (1+i)⁻ⁿ): PMT = 100,000 × 0.0066667 / (1 − 1.0066667⁻¹⁸⁰) = $955.65 per month.

2Price the partial at your yield. Your monthly yield is 10% / 12 = 0.8333% (0.0083333). The price is the present value of 60 payments of $955.65 at that rate: Price = 955.65 × (1 − 1.0083333⁻⁶⁰) / 0.0083333 = $44,978.12. You pay about $44,978 today for $57,339.13 of scheduled cash flow (60 × $955.65) — and you control payments on a note secured by the full collateral while having only ~45% of the UPB invested.

3Find the seller's residual. Run the note's own amortization schedule forward 60 payments at the 8% note rate. The balance after payment 60 is B₆₀ = 100,000 × 1.0066667⁶⁰ − 955.65 × (1.0066667⁶⁰ − 1) / 0.0066667 = $78,766.26. That balance is exactly what the seller's 120 remaining tail payments are worth at the note rate at the moment of reversion.

4Value the tail in today's dollars. Discounting the 120 tail payments (months 61–180) back to today at the seller's 8% discount rate gives PV = [955.65 × (1 − 1.0066667⁻¹²⁰) / 0.0066667] ÷ 1.0066667⁶⁰ = $52,868.74. (Because the seller discount rate here equals the 8% note rate, the value at reversion is the schedule balance, $78,766.26; the $52,868.74 figure is that future value pulled back to today.)

5The split. The investor pays $44,978.12 for the first 60 payments ($57,339.13 total cash). The seller keeps the tail: 120 payments totaling $114,678.25, worth $78,766.26 at reversion and about $52,868.74 in today's dollars at 8%. The seller raised ~$45,000 of cash while giving up only about a third of the note's total scheduled payments.

The investor's position amortizes like a small loan. Treating the $44,978.12 purchase price as a balance earning 10%/12 monthly and being paid down by $955.65 each month, the remaining investment is $37,679.60 after year 1, $29,616.84 after year 2, $20,709.80 after year 3, $10,870.07 after year 4, and exactly $0.00 when payment 60 arrives. This declining basis is why partials carry low investment-to-value risk that keeps shrinking.

How the Math Works

Why a partial works

A partial splits one note into two time slices. The investor buys the front end — the next X monthly payments — and prices them like any annuity: the present value of the payment stream at the investor's required yield. The seller keeps the back end (the "tail"): every payment after month X, plus the principal balance if the borrower pays off. The note itself is unchanged — the borrower keeps making the same payment; only who receives it changes over time. Sellers use partials to raise cash without selling the whole note at a deep discount, and investors use them to hit a target yield with less capital at risk.

Formulas used by this calculator

All math is monthly-periodic. Monthly rate = annual nominal rate ÷ 12. No intermediate rounding; display values are rounded at the end.

Note payment: PMT = UPB × i / (1 − (1+i)⁻ⁿ) where i = note rate ÷ 12, n = remaining months. If i = 0, PMT = UPB / n.
Partial price: Price = PMT × (1 − (1+y)^−X) / y where y = investor yield ÷ 12 and X = payments purchased. If y = 0, Price = PMT × X.
Seller's balance at reversion: the note's scheduled balance after X payments, B_X = UPB × (1+i)^X − PMT × ((1+i)^X − 1) / i. A key identity: this also equals the PV of the remaining n − X payments at the note rate, which is why the schedule balance is the tail's value at the note rate at that future point.
PV of the tail today: PV_tail = [PMT × (1 − (1+s)^−(n−X)) / s] ÷ (1+s)^X where s = seller discount rate ÷ 12. Set the seller rate equal to the note rate and the value at reversion is exactly the schedule balance; today's value is that amount discounted X months. A higher seller discount rate lowers today's value.
Investor's remaining investment: the purchase price is amortized at the investor yield: Balance_k = Price × (1+y)^k − PMT × ((1+y)^k − 1) / y. It reaches exactly $0.00 at payment X (the table absorbs any sub-cent rounding in the final row).

What happens on early payoff — know your convention

Early payoff is the single most important clause in a partial agreement, and there is more than one market convention. The two most common:

Schedule A / present-value method. The partial agreement attaches a schedule ("Schedule A") listing, for each month, what the investor is owed if payoff occurs then. The standard fill for that schedule is the present value of the investor's remaining purchased payments discounted at the note rate. Example: if the borrower pays off after month 24 of our 60-payment partial, the investor receives PV = 955.65 × (1 − 1.0066667⁻³⁶) / 0.0066667 ≈ $30,499, and the seller gets the rest of the payoff. Discounting at the note rate (8%) rather than the investor yield (10%) makes the investor's payoff slightly larger than their economic balance at 10% — early payoff is typically a modest windfall for the investor under this method.
Amortization-down method. The investor's payoff equals the original purchase price amortized down at the agreed investor yield — exactly the "Investor's Remaining Investment Balance" table this calculator shows. After month 24 that is $29,616.84. This delivers precisely the contracted yield, no more and no less, with the seller receiving everything above it.

Some agreements use other variants (e.g., investor first receives unrecovered principal, or a negotiated fixed payoff schedule). The economics differ by hundreds or thousands of dollars, so the contract language controls — never assume. This calculator's amortization table doubles as an amortization-down payoff schedule; the Schedule A figure for any month is the PV of the payments still owed to the investor at the note rate.

Assumptions and limitations

Fully-amortizing, fixed-rate note paid exactly on schedule; no balloons, no late or missed payments, no servicing fees or transaction costs.
Monthly nominal rates (annual ÷ 12) throughout; yields shown are annualized nominal (monthly × 12), the standard quoting convention in the note business.
Default risk, foreclosure outcomes, and the priority terms of the partial agreement are not modeled — they are negotiated, not computed.

Frequently Asked Questions

How do you calculate a partial note purchase?

First compute the note's monthly payment from its unpaid principal balance (UPB), note rate, and remaining term using the standard amortization formula. Then the partial price is the present value of the X payments being purchased, discounted at the investor's required yield converted to a monthly rate (annual yield divided by 12). Price = PMT × (1 − (1 + y)^−X) / y, where y is the monthly yield and X is the number of payments purchased. The seller's residual is the note's scheduled balance after those X payments.

What is a partial in note investing?

A partial is a transaction where an investor buys only the next X payments of a performing note instead of the whole note. The investor pays a lump sum today (the present value of those payments at the investor's yield) and collects the front-end payments. After the purchased payments are received, the note reverts to the seller, who keeps the remaining "tail" payments and the back-end balance. It lets a note holder raise cash without selling the entire asset at a deep discount.

What happens if the borrower pays off early on a partial?

The payoff is split between investor and seller according to the partial agreement. The two most common conventions are: (1) the Schedule A / present-value method, where the investor receives the present value of their remaining purchased payments discounted at the note rate, with the rest going to the seller; and (2) the amortization-down method, where the investor's payoff equals their original purchase price amortized down at the agreed yield. The contract controls — always confirm which convention applies before closing.

How is the seller's residual value calculated?

The seller's residual is the note's remaining principal balance on its amortization schedule immediately after the investor's X purchased payments have been made. At that reversion point, that balance is exactly what the remaining tail payments are worth when discounted at the note rate. To value the tail in today's dollars, discount the tail payments back to today at the seller's chosen discount rate — a higher discount rate produces a lower present value.

Are partials safer than full note purchases?

Partials generally reduce the investor's risk per dollar invested. The investor pays less capital, sits in first position on the payment stream, and the investment-to-value (ITV) ratio is far lower because the purchase price is small relative to the collateral value. If the borrower defaults, the investor's smaller basis is usually well covered by the property. The trade-offs are lower total profit, dependence on the partial agreement's default and prepayment terms, and the need for a clear servicing arrangement with the seller.