Buying houses subject to existing financing

By Jim Ingersoll

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You want to invest in a home, but you have very little money saved and you can not get a mortgage. What are your options?

If you have money saved for a 20% down payment, good income, stable job and good credit, you should easily be able to get a traditional mortgage.  That will disqualify most real estate investors. The truth is that even if you can qualify to go get a mortgage, you should not do it.  One key to investing is to learn creative financing so you don’t need to rely on banks at all.


How would you like to buy houses without needing to get a new mortgage? Buying houses subject-to means that the buyer makes the acquisition without paying off the existing mortgage on the property.  The ownership of the property changes to the new owner, but the debt does not get formally assumed and does not get paid off at closing.  The mortgage remains in the name of the person who originally took the loan when the house was originally purchased.

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Despite the mortgage-due-on-sale clause, sometimes a buyer can take over payments on an existing mortgage. It is not likely a bank will demand the full mortgage,  if monthly payments are being made on time. These deals are called “subject to” sales.  If there is equity in the deal, maybe the seller will hold a 2nd for it or accept a small cash down payment.

I was speaking to a good friend of mine in Colorado recently and he told me that he has now purchased over 100 homes for his rental portfolio, all acquisitions made using subject to financing.  Subject to investing can provide opportunities to buy houses with no money down and without the investor needing to get a new mortgage.

The good news is that prices are going up again and there are tons of very low interest mortgages that could work great for subject to investing!

These opportunities are available from motivated sellers who need debt relief, have a sudden life change or just transferring to a new city.

While subject-to sales sound complicated, they can really be a great deal for both buyers and sellers with little money.

Want to learn more about subject to?  Check this link out:

Investing in subject to deals