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Subject-To vs Seller Financing Calculator
Both subject-to and seller financing let buyers acquire property without bank financing. They differ in risk, mechanics, and monthly cost. This calculator compares the two given the same deal so you can pick the right tool.
Subject-to: monthly payment
$1,085
seller's existing P&I
Seller financing: monthly
$1,867
Monthly cost difference
$782
seller financing − subject-to
Seller carry-back equity
$49,000
for subject-to
Seller financing note amount
$267,000
How the math works
Subject-tomeans you take title with the existing mortgage staying in place. The buyer starts making the seller's payments at the original rate. Preserves a low legacy rate for the buyer — huge advantage vs today's market.
Seller financingmeans a brand new note between buyer and seller at a negotiated rate — usually above market. Much less risky for the seller (no due-on-sale) but the buyer pays today's rates. Subject-to is cheaper monthly; seller financing is cleaner and more common.
How to Use
- Enter sale price, existing loan balance, rate, and monthly payment.
- Enter buyer down payment.
- For seller financing alternative, enter new note rate and amortization.
- Compare monthly payments and seller equity treatment.
Frequently Asked Questions
Is subject-to legal?
Legal, but it violates the lender's due-on-sale clause. The lender can (but rarely does) call the loan due upon discovery. Risk is real. Experienced subject-to investors use performance mortgages and trust structures to manage it.
Which costs less monthly?
Subject-to usually — you inherit the seller's low legacy rate. Seller financing charges a brand-new rate, usually above market. On a $250k mortgage at 3.25% vs 7.5% the difference is $700+/month.
Why would a seller accept subject-to?
Distress, behind-on-payments, can't afford current payment, facing foreclosure, or time-constrained. Subject-to buyers bring immediate relief without requiring seller to repay the mortgage first.
When is seller financing better?
When the property is free and clear, or when the seller wants installment sale tax treatment, or when the seller prefers not to take the due-on-sale risk. Seller financing is the cleaner, more defensible structure.
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