If you’re thinking about moving or downsizing, you might ask: “Can I sell my house mortgage?” While you can’t literally “sell” your mortgage, you can sell your house even if you still have a mortgage on it.
In this post, we’ll explain how selling a mortgaged home works, what happens to the mortgage during the sale, and what options are available if you want to transfer your mortgage to someone else.
What Happens When You Sell a House with a Mortgage?
When you sell a house that has a mortgage:
- The proceeds from the sale go toward paying off your existing mortgage.
- Any remaining money after paying off the loan is yours to keep (or use for your next home).
- If the sale price is less than what you owe , you may need to cover the difference — unless you qualify for a short sale .
This is the most common and straightforward way to sell a home while still under a mortgage.
Can You Transfer Your Mortgage to the Buyer?
Most traditional mortgages are not transferable — meaning the buyer cannot simply take over your existing mortgage. However, there are exceptions:
1. VA Loans
- Some VA loans are assumable, meaning qualified buyers can take over the loan with lender approval.
2. FHA Loans
- These may also be assumable under certain conditions.
3. Conventional Loans
- Most conventional mortgages include a due-on-sale clause , which requires the loan to be paid in full when the property is sold.
If the mortgage is assumable, the buyer must qualify financially and get approval from the lender.
Can You Sell Your Mortgage Note?
Yes, but only in specific situations:
- If you’re a private lender who financed the home sale for a buyer (e.g., owner-financed real estate), you may be able to sell your mortgage note (the legal document outlining repayment terms) to a third-party investor.
- This is not applicable if you’re a typical homeowner with a bank mortgage.
Steps to Sell a House with a Mortgage
- Check your mortgage balance and equity.
- Hire a real estate agent or list your home for sale.
- Accept an offer and go through escrow.
- Use sale proceeds to pay off the mortgage.
- Close the sale and move on.
Final Thoughts
While you can’t directly sell your mortgage , you can absolutely sell your house even if you still owe money on it. The mortgage is typically paid off at closing, and any leftover funds go to you. In rare cases, such as with FHA or VA loans, the mortgage might be assumable by a qualified buyer.
Always consult with your lender and real estate agent before listing your home to understand your financial obligations and options.
Frequently Asked Questions (FAQs)
Q1: Can I sell my house if I still have a mortgage?
Yes, you can sell your house even with an outstanding mortgage. The loan is usually paid off at closing using the proceeds from the sale.
Q2: What happens to my mortgage when I sell my house?
Your mortgage is paid off when the house sells. Any remaining funds after paying the lender go to you.
Q3: Can someone take over my mortgage when I sell?
Only in limited cases — like with FHA or VA loans — can a buyer assume your mortgage. Most conventional mortgages require full payoff upon sale.
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