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Wrap Fee Calculator

A wrap-around mortgage captures the spread between a seller's low legacy rate and a buyer's new note at market rate. This calculator sizes the monthly spread and seller equity retained in the wrap.

Existing mortgage balance

Existing rate

Existing monthly P&I

Total wrap note

Wrap rate to buyer

Wrap amortization (yr)

Buyer pays seller (monthly)

$2,168

Seller pays old loan (monthly)

$1,210

Seller's monthly spread

$958

arbitrage cash flow

Annual spread

$11,491

Seller's equity in wrap

$65,000

wrap − existing balance

How the math works

A wrap-around (all-inclusive) mortgage means the buyer pays the seller on a new, larger note (the wrap). The seller continues paying the original mortgage and keeps the spread as income. Works best when the seller's original rate is well below current market.

Due-on-sale risk applies — the underlying lender could accelerate on discovery. Use a third-party servicer to ensure the underlying mortgage stays current; never let the seller directly hold buyer payments while neglecting the existing loan.

Editorial noteMaintained by EveryCalc - Reviewed June 2026

EveryCalc calculators are designed for fast, practical estimates with transparent inputs and no required account. We use plain formulas, visible assumptions, and related tools so visitors can check the result from more than one angle.

Results are informational only. For financial, tax, legal, medical, construction, or other high-impact decisions, verify the output against primary sources or a qualified professional.

Learn more about our review process on the EveryCalc methodology page.

How this calculator works

What this page estimates

This Wrap Fee Calculator is built to give a quick, browser-based estimate for wrap fee. A wrap-around mortgage captures the spread between a seller's low legacy rate and a buyer's new note at market rate. This calculator sizes the monthly spread and seller equity retained in the wrap. The inputs stay on the page during normal use, and the result should be treated as an estimate for planning, comparison, or education rather than professional advice.

Calculation approach

The calculator applies the standard relationship implied by the inputs, then formats the answer so it can be checked and reused. For finance tools, the most important step is using consistent units, rates, time periods, and assumptions before comparing the result with another calculator or outside quote.

Example workflow

For example, start with a realistic value you already know, change one input at a time, and watch how the answer moves. That makes it easier to tell whether the result is being driven by the main amount, the rate, the time period, or a unit conversion.

Practical checks

Use current, real-world numbers when the result affects money, health, tax, or legal decisions.
Run a low, base, and high case when the inputs are estimates.
Check the related calculators below when the next decision depends on a different assumption.

How to interpret the wrap fee result

Best use

Use the result as a planning number for comparing payments, rates, returns, tax reserves, or cash-flow choices before you request a quote or make a commitment.

Cross-check

Compare the answer with the contract, lender estimate, tax form, brokerage statement, payroll record, or invoice that will control the real-world outcome.

Watch for

Do not rely on a single optimistic rate, return, or fee assumption. Money pages work best when you run low, base, and high cases and keep professional advice separate from the estimate.

This page belongs to the Finance calculator library, so the answer should be read in the context of the decision you are modeling rather than as a universal rule.

Before relying on this wrap fee estimate

Most calculator mistakes come from the inputs, not the arithmetic. Use this short audit before you reuse the answer in a spreadsheet, quote, application, or important conversation.

Confirm source numbers

Match balances, rates, fees, taxes, income, and payment dates against the lender quote, payroll record, tax form, statement, invoice, or contract.

Separate cash flow from total cost

A lower monthly payment can still cost more over time if fees, interest, taxes, or a longer term are hidden in the structure.

Run conservative cases

Test at least one higher-cost or lower-return case before using the output for a purchase, refinance, investment, loan, or tax decision.

Rerun this page when the rate, price, term, fee, tax rule, income, expense, or expected holding period changes.

How to Use

Enter the existing first mortgage balance, rate, and monthly payment.
Enter the wrap note amount (sale price minus down payment) and the rate charged to the buyer.
Enter wrap amortization period.
Read seller spread: buyer payment minus existing loan payment.

Frequently Asked Questions

Is a wrap-around the same as subject-to?

Related but different. Subject-to takes title with existing mortgage in place — buyer pays at seller's legacy rate. Wrap-around adds a new overlay note at a higher rate, capturing spread for the seller. Wraps are more common when the seller wants income.

Does due-on-sale apply?

Yes — same risk as subject-to. The underlying lender can call the loan if they discover the wrap. Use a professional servicer and consult a real estate attorney for documentation.

Who handles the payments?

Always use a licensed loan servicer. Buyer pays servicer; servicer pays underlying mortgage; servicer pays seller the spread. Eliminates trust issues and ensures the underlying mortgage stays current.

When does a wrap make sense?

When the seller has a low legacy rate and wants income, the buyer can't qualify for bank financing, and both are comfortable with due-on-sale risk. Works best in normal markets — distressed sellers usually need cash, not a note.