Subject-To Financing (Sub-To)
Definition
Subject-to (sub-to) is a creative financing structure where the buyer takes ownership of a property 'subject to' the existing mortgage — meaning the seller's mortgage stays in place, in the seller's name, and the buyer takes title and makes the payments. Sub-to deals can preserve a low-rate mortgage (3–4% rate locked in 2020–2021) that the buyer could not otherwise replicate at today's market rates. Risks: most mortgages contain a 'due on sale' clause that allows the lender to call the loan due upon transfer, though enforcement is rare in current market conditions.
Worked example
Seller has a $250,000 mortgage at 3.2% from 2021 on a property now worth $320,000. Selling traditionally, the seller pays off the $250k mortgage. In a sub-to deal, the buyer takes title, the $250k mortgage stays in seller's name, and the buyer pays the seller's mortgage company directly. The buyer effectively assumes a 3.2% rate — material savings vs today's market.
How DealIntel uses it
DealIntel surfaces sub-to as a strategic option when the seller's existing mortgage rate is materially below market and the deal supports the structure. The platform flags due-on-sale risk and recommends legal review for any creative-finance close.
Related terms
- Debt-Service Coverage Ratio Loan · DSCRAn investment property loan qualified on the property's rental income rather than the borrower's W-2 income.
- Hard Money LoanShort-term, asset-collateralized real estate financing from a private lender — fast to close, higher-cost.
- Loan-to-Value · LTVThe ratio of a loan amount to the appraised value of the underlying property.
Matt Abadi is the founder of DealIntel. He leads the development of the platform's six-strategy underwriting engine, 25-point Kill List, and Monte-Carlo financial model — the institutional analysis stack DealIntel applies to every fix and flip deal. DealIntel was founded in 2025 with the central thesis that knowing when not to invest is the most valuable number on the page.