Yes, it is termed a seller-financed mortgage. You will need to include their names and social security number and they will have to report it as income.
When you go to the mortgage portion of deductions, you will need to select, "Type it in myself" and type the name. Then next screen will ask about seller-financing.
The Internal Revenue Service doesn't care whether you use a nationally known bank or private financing for your mortgage, as long as the financing meets IRS requirements.
In order to qualify, a seller-financed mortgage must be secured by your home and the home must be qualified. When the mortgage is secured by your home, it means that if you fail to repay it, the lender can foreclose on the home to satisfy your debt. A qualified home is either your main home or a second home and it must have kitchen, sleeping and bathroom facilities, so even some recreational vehicles or houseboats could qualify.
Your mortgage interest deduction may be reported slightly differently on your taxes, but the result is the same. If you receive a Form 1099-R from the lender, it's reported the same way: on line 10 of Schedule A. If you don't receive a Form 1099-R, report the mortgage interest on line 11. Next to line 11, report the lender's name, address and taxpayer identification number. This can be a Social Security number, individual taxpayer identification number or an employer identification number.
You must give the lender your name, address and Social Security number for her to report on her income tax return when she reports the interest income.