Most sellers think they have two options: list with an agent or take a cash offer. Subject-to financing is a third path — one that often puts significantly more money in sellers' pockets. Here's what it means and how it works.
What Does "Subject-To" Mean?
Subject-to (sometimes written "sub2") means a buyer purchases your property subject to your existing financing. Your mortgage stays in place. The buyer takes title and takes over making your monthly payments — but the loan remains in your name until it's paid off or refinanced.
You sell the house. The buyer gets the deed. Your mortgage stays on the books — but someone else is paying it.
Why Would a Buyer Do This?
If you locked in a mortgage at 3-4% and current rates are 7%, your existing loan is extremely valuable to a buyer. They avoid today's high rates — which means they can afford to pay you more for the property than a straight cash buyer can offer.
A Simple Example
Say your home is worth $250,000 and you owe $180,000 at 3.5%:
- Cash offer: A cash buyer might offer $200,000 — paying off your $180,000 mortgage and giving you $20,000 in equity.
- Subject-to offer: A subject-to buyer takes over your $180,000 loan and pays you $45,000 in equity — because keeping your low-rate loan saves them significantly every month.
Same property. Same mortgage payoff. But potentially $25,000 more in your pocket.
What Are the Risks for Sellers?
The main consideration is the due-on-sale clause. Most mortgages contain language saying the full loan balance is due if the property is sold. In practice, lenders rarely call loans due as long as payments are being made consistently — but it's a risk worth understanding.
The more practical concern is buyer reliability. If the buyer stops making payments, your credit is affected because the loan is still in your name. This is exactly why working with an experienced, reputable company matters — and why having a network behind that company matters even more.
Subject-To Is an Option, Not a Requirement
At Tallbridge, subject-to is one of several structures we can offer — alongside straight cash purchases and other custom arrangements. We always present options side by side with full transparency on the numbers. You choose what works best for your situation. There's never pressure to take a creative structure if a cash offer makes more sense.
When Subject-To Makes Sense for Sellers
Subject-to is worth exploring when:
- You have a below-market interest rate (under 5%) that's valuable to a buyer
- You need more than a straight cash offer would provide
- You're facing foreclosure and need payments stopped quickly
- You owe close to or more than market value
Subject-To Across Our Texas Markets
We explore subject-to structures across our Texas markets — Austin, San Antonio, Houston, Dallas, Killeen, and Waco. Texas has no restrictions on subject-to transactions, making it a viable option in many situations.
Get your offer today and ask us about all available options for your specific property.