What is subto in real estate?

What is subto in real estate?


In the world of real estate, there are various terms and concepts that can sometimes be confusing to those not familiar with the industry. One such term is “subto.” In this article, we will dive deeper into the meaning and significance of subto in real estate transactions.

Understanding Subto in Real Estate

Definition: Subto, short for “subject to,” refers to a type of real estate transaction where the buyer takes over the existing mortgage on a property without formally assuming the loan. In other words, the buyer agrees to make the mortgage payments on behalf of the seller, but the seller remains responsible for the loan.

How It Works: When a property is sold subject to the existing mortgage, the buyer does not obtain a new loan or assume the seller’s loan. Instead, the buyer simply takes over the existing mortgage payments. This can be an attractive option for buyers who may not qualify for a traditional mortgage or who want to avoid the costs and time associated with obtaining a new loan.

Benefits for Buyers: One of the main benefits of buying a property subject to the existing mortgage is that it allows buyers to acquire a property with little or no money down. Since they are not obtaining a new loan, they can avoid the need for a down payment. Additionally, buyers may also benefit from the existing interest rate on the mortgage, which could be lower than current market rates.

Benefits for Sellers: Sellers who are facing financial difficulties or need to sell their property quickly may find the subto option appealing. By transferring the mortgage to the buyer, they can avoid foreclosure or the need to continue making mortgage payments on a property they no longer want or can afford. Subto transactions can provide sellers with a way to sell their property without having to pay off the existing mortgage.

Risks and Considerations: While subto transactions can be advantageous for both buyers and sellers, there are risks and considerations to keep in mind. For buyers, it is crucial to thoroughly review the terms of the existing mortgage and ensure they can comfortably make the payments. Sellers should also be aware that they will still be responsible for the loan, even if the buyer defaults on the payments. It is important for both parties to consult with legal and financial professionals to fully understand the implications of a subto transaction.


In conclusion, subto, or subject to, is a real estate transaction where the buyer takes over the existing mortgage without formally assuming the loan. This type of transaction can benefit both buyers and sellers, providing opportunities for buyers to acquire properties with little or no money down and allowing sellers to sell their properties quickly without paying off the existing mortgage. However, it is essential for all parties involved to carefully consider the risks and implications of a subto transaction and seek professional advice when necessary.


– Investopedia: www.investopedia.com
– The Balance: www.thebalance.com
– BiggerPockets: www.biggerpockets.com