Subject-To Calculator
Analyze a subject-to creative finance deal: equity acquired, monthly cash spread, and return on your cash to seller.
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Existing Mortgage
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Deal Analysis
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How this works
In a subject-totransaction, you acquire title to a property while the seller's existing mortgage stays in place. You take over the payments — but the loan remains legally in the seller's name. The appeal: you get the property without a new loan qualification, and you inherit the seller's existing rate (which may be far below current market rates).
This calculator measures two dimensions of value. First, immediate equity: the gap between the property's current value and the mortgage balance you're assuming. If the property is worth $240K and the balance is $180K, you've acquired $60K in equity for the cost of your cash to seller. Second, monthly spread: the difference between market rent and the existing payment. If rent is $1,600 and the payment is $1,100, you net $500/month in cash flow.
The ROI calculation here combines first-year cash flow plus acquired equity, divided by cash to seller. This is a simplified measure — it does not discount future cash flows or account for selling costs — but it gives a fast read on whether the deal justifies your out-of-pocket cost.
Important: Subject-to is a sophisticated strategy with real legal and lender risk. The due-on-sale clause in most mortgage contracts technically allows the lender to call the loan if ownership transfers. Work with a qualified real estate attorney, and never represent a subject-to deal as risk-free to a seller. Full transparency and proper documentation protect all parties.
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Frequently Asked Questions
What is a subject-to deal?
In a subject-to (or "sub-to") transaction, you purchase a property and take title while the seller's existing mortgage remains in place. You make the existing monthly payments. The loan stays in the seller's name, but you own the property.
What are the main risks of subject-to?
The primary risk is the due-on-sale clause: most mortgages allow the lender to demand full repayment if the property is transferred. In practice, lenders rarely call loans that are current, but they can. You must be financially prepared to refinance or sell if that happens.
Why would a seller agree to a subject-to deal?
Sellers in distress — facing foreclosure, divorce, job loss, or relocation — may need a fast solution and cannot wait for a traditional buyer. A subject-to investor relieves them of payments immediately without the delay of a conventional sale.
Is subject-to legal?
Taking title subject-to existing financing is legal. The ethical and legal complexity comes from how it is disclosed and structured. Always work with a real estate attorney experienced in creative finance. Full disclosure to the seller is non-negotiable.