What Is a "Subject-To" Deal in Real Estate?
A "Subject-To" deal—short for subject to the existing financing—is a real estate strategy where a buyer takes control of a property and its mortgage without paying off the existing loan. The loan stays in the seller’s name, but the buyer makes the monthly payments moving forward.
This creative approach helps homeowners who are behind on payments or need to sell fast but don’t have enough equity to pay off their mortgage. It’s also popular among savvy real estate investors looking to acquire properties with little to no upfront cash.
How It Works (Simple Example)
Let’s say you owe $220,000 on your house, but due to market conditions, it's only worth $225,000. You’re behind two months on payments and facing foreclosure.
An investor agrees to buy the house subject-to the existing loan. That means:
You deed the house to the investor
The mortgage stays in your name
The investor catches up on payments and continues paying your lender
You avoid foreclosure and move on with no added debt
This is legal and done through standard contracts—but requires trust and expertise.
Benefits for Sellers
✅ Avoid foreclosure—even if you're already behind on payments
✅ No need for bank approval or waiting on short sale red tape
✅ Close in days instead of months
✅ No repairs, fees, or commissions
✅ Can walk away without owing anything further
Why Investors Love Subject-To
🏡 No need to qualify for new financing
📈 Can acquire multiple properties quickly
💡 Build long-term cash flow without big capital upfront
Investors often turn these homes into rental properties or resell them with seller financing or lease options.
Common Misconceptions (And Truths)
“Isn’t this illegal?” → No. It’s 100% legal and done through title companies.
“Won’t the loan call due?” → Technically, yes. But it rarely happens if payments are current.
“Why would a seller agree to this?” → Because their alternative may be foreclosure, bankruptcy, or walking away with nothing.
Should You Sell Your House Subject-To?
If you're:
Behind on mortgage payments
Facing foreclosure or bankruptcy
Unable to cover closing costs or agent commissions
…then a Subject-To deal could be your fastest way out without ruining your credit.
📞 Request a Free Consultation and find out if your property qualifies for a Subject-To offer.
Bonus Resource: Learn how Subject-To compares with Short Sales, Forbearance, and Wraparound Mortgages in our full Creative Financing Glossary.** Real-world examples, seller benefits, and myth-busting around "Subject-To" deals.