What Is a Subject-To Deal?

A Subject-To real estate deal means the buyer purchases a property subject to the existing mortgage. The loan stays in the seller’s name, but the buyer takes over the payments and takes legal title to the property.

Key Points:

• The buyer does not assume the loan officially

• The lender is usually not notified

• The seller’s loan remains active (and on their credit report)

• The buyer gains ownership, equity, and control of the asset

This strategy is most common in off-market or distressed situations, especially when sellers are behind on payments or want to avoid foreclosure.

What Is an Assumable Loan?

An Assumable Loan is a mortgage that can be formally transferred to a new buyer with the lender’s approval. The buyer takes over the original loan terms—interest rate, balance, and amortization schedule.

Most common with:

• VA Loans

• FHA Loans

• Some USDA Loans

Key Differences from Subject-To:

• The loan is transferred legally and formally

• The buyer must qualify with the lender

• The seller is released from liability

• The lender is fully involved in the process

When Should You Use a Subject-To Deal?

Subject-To is ideal when:

• The seller is behind on payments or facing foreclosure

• The property won’t qualify for traditional financing

• The buyer wants to avoid lender red tape

• You’re structuring a creative investment deal (like seller financing or renovations)

Example:
CJ Hegney helped a seller in Paso Robles avoid foreclosure by purchasing Subject-To and catching up on back payments. The 4% interest loan was left in place—saving the buyer thousands per year compared to new financing.

When Should You Use an Assumable Loan?

An Assumable Loan is better when:

• The loan is a VA, FHA, or USDA product

• The buyer wants a clean transfer and lender blessing

• The seller insists on being released from the loan

• The buyer can qualify and doesn’t mind a slower process

Example:
A home in Arroyo Grande with a 3.25% VA loan was assumed by a new buyer, avoiding current 7% rates. The buyer went through underwriting and the seller was fully released from all liability.

Which Is Better?

It depends on your situation.

Use Subject-To if:

• You’re buying off-market

• The seller is motivated or distressed

• You want a fast, flexible, and creative close

• You’re OK taking on the loan without lender involvement

Use an Assumable Loan if:

• The loan is assumable (VA/FHA/USDA)

• You want full legal transfer and seller release

• You can qualify with the lender

• You're buying a home on-market and want low fixed-rate terms

How CJ Hegney Helps Structure These Deals

At The Hegney Group, we specialize in:

• Subject-To purchases

• Assumable loan negotiations

• Seller financing combinations

• Creative structuring with legal and escrow support

We’ve helped clients all across San Luis Obispo County, including Grover Beach, Paso Robles, and Morro Bay, turn low-interest mortgages into major opportunities.

Want Help Structuring Your Deal?

Whether you're a:

• Seller stuck with payments

• Buyer priced out by today’s interest rates

• Investor looking for creative financing

CJ Hegney can help you navigate Subject-To deals and Assumable Loans the right way—with legal compliance, full disclosures, and smart risk mitigation.