Quick answer: A low interest rate on your mortgage has real value, and a normal sale pays it off. To keep that value in the deal, you can look at a loan assumption (common with FHA and VA loans), a sale subject to the existing mortgage, or seller financing. Each one has risks, and the due-on-sale clause matters a lot. Compare them with a traditional sale and talk to a Florida attorney before you sign.
Many Florida homeowners locked in a low rate a few years ago. Now life has changed. Maybe you need to move for work, the house is too small, or the payment still works but you need to sell. A regular sale pays off your loan, and your low rate is gone. This guide explains why that rate is worth something, and the ways you might keep it in play.
Why Your Low Rate Has Value
A lower rate means a lower payment for the same loan. Here is a simple example with made-up numbers. On a $200,000 loan paid over 30 years:
- At 3 percent, principal and interest is about $843 a month.
- At 7 percent, it is about $1,331 a month.
That is about $488 a month for the same balance. These rates are examples, not a quote of today’s market. The point is that a buyer may pay more, or offer better terms, to get a payment like yours. A normal sale throws that away.
Option 1: Let a Buyer Assume Your Loan
An assumption means the buyer takes over your loan with the lender’s approval. The rate and remaining term stay the same.
FHA loans
HUD says all FHA insured mortgages are assumable. For loans closed on or after December 15, 1989, the buyer must qualify with the lender. When a creditworthy buyer assumes the debt, the lender is required to release the original borrowers from liability.
VA loans
The VA says its loans can be assumed when the buyer is creditworthy under VA standards. There is one big catch for veterans. If the buyer does not substitute their own VA entitlement, your entitlement stays tied to the loan until it is paid in full. If the buyer is an eligible veteran who substitutes entitlement, yours can be restored. The VA also sets deadlines for the loan holder to process the request.
Other loans
Many other mortgages include a due-on-sale clause and may not allow a new borrower to take over. Read your note and call your servicer.
The equity gap
An assumption only covers the loan balance. If your home is worth more than you owe, the buyer must pay you the difference in cash or with a second loan. That gap is often the hard part.
Option 2: Sell Subject to the Existing Mortgage
In a subject-to sale, the buyer takes the deed, and your loan stays in place in your name. The buyer makes the payments. The lender is not asked to approve it. See our full subject-to guide.
The due-on-sale risk, honestly
Federal law defines a due-on-sale clause as a term that lets the lender call the whole balance due if the property, or an interest in it, is sold or transferred without the lender’s written consent. The same law lists transfers where a lender cannot use that clause, such as a transfer to a spouse in a divorce, a transfer to a relative after death, a short lease with no purchase option, or a transfer into your own living trust. A sale to an outside buyer is not on that list. So:
- The lender may call the loan due. Nobody can promise it will not.
- The loan stays in your name. Late payments by the buyer can hurt your credit.
- If the loan is called due and not paid, the lender can foreclose.
How to protect yourself
- Close through a licensed Florida title company, so the deed and funds are handled properly.
- Get a written agreement that says who pays the mortgage, taxes, and insurance, and what happens if the loan is called due.
- Ask for proof of every payment, or a way to check the loan yourself.
- Make sure the home stays insured.
- Have your own Florida real estate attorney review it.
Option 3: Seller Financing
With seller financing, you act as the bank. The buyer pays you over time under a note and mortgage. This works best when the home is paid off or you have a lot of equity. You get monthly income, and the buyer gets a loan they might not get from a bank. Learn the basics in our guide on cash offer vs listing vs selling on terms.
If you still have a mortgage, seller financing becomes a wrap mortgage. The buyer pays you, and you keep paying your lender. Your due-on-sale clause still applies, so it has the same risk as subject-to.
Federal rules also apply. The CFPB’s Regulation Z sets conditions for sellers who finance homes. For example, to use its seller financing exclusions, a seller can finance only a limited number of properties in a year, and the rate must be fixed or not adjust for at least five years, among other conditions. Use an attorney to write the note and mortgage.
See cash as is, creative terms and a 1% listing side by side, in writing. It takes about a minute.
See my optionsOption 4: A 1% Listing
Sometimes the best move is to let the rate go. If you have good equity and the home shows well, a market sale may bring the most money. With a 1% listing, the home goes on the MLS through our licensed Florida real estate partner, and the listing fee is 1% of the sale price. Any buyer agent pay is separate and negotiable.
Option 5: Keep It and Rent It
Some owners keep the low rate and rent the home. That can work, but you become a landlord, and you need landlord insurance. Your loan may also have rules about occupancy, so check with your servicer. If you later sell with a tenant in place, read our guide to selling a house with tenants.
Which Option Fits?
| Your situation | Options to look at |
|---|---|
| FHA or VA loan, little equity | Assumption, subject-to |
| Low rate, some equity, need to move | Subject-to with cash for equity, assumption |
| Paid off or large equity | Seller financing, 1% listing |
| Want the highest price and can wait | 1% listing |
How HOMKEYS Can Help
HOMKEYS LLC buys houses across Florida. If you have a low rate loan, we can look at a cash offer, a purchase subject to your existing mortgage, seller financing, and a 1% listing through our licensed partner brokerage and show you the trade-offs in writing. We will explain the due-on-sale clause plainly, and we encourage you to have your own attorney review any terms deal. Every closing goes through a licensed Florida title company.
Subject to qualification, property inspection, and transaction terms.
We buy in many areas, including Wesley Chapel, Parrish, Port Charlotte, and Kissimmee. Tell us about your home and loan or call (305) 914-4191.
Frequently Asked Questions
Can a buyer take over my low interest rate mortgage?
Sometimes. HUD says all FHA insured mortgages are assumable, and loans closed on or after December 15, 1989 need the new borrower to qualify. VA loans can also be assumed by a creditworthy buyer, says the VA. Many other loans have a due-on-sale clause. Read your note and call your servicer to ask if your loan can be assumed.
If someone assumes my VA loan, can I get a VA loan again?
It depends on who assumes it. The VA says that without a substitution, your entitlement stays tied up until the loan is paid off. If the buyer is an eligible veteran who substitutes their own entitlement, your entitlement can be restored. Ask your servicer and the VA before you agree to an assumption.
Is a subject-to sale legal in Florida?
Buying a home subject to the existing loan is not a crime in itself. But it does not change your loan contract. The due-on-sale clause in most mortgages lets the lender ask for the full balance if the home is sold without its consent. The loan also stays in your name. Have a Florida real estate attorney review any subject-to deal before you sign.
What happens if the lender calls the loan due after a subject-to sale?
The lender can ask for the full balance. Then the buyer would need to pay it off, often by refinancing or selling the home. If no one pays, the lender can foreclose, and that would affect the credit of the person whose name is on the loan, which is you. That is why the written agreement should say exactly what the buyer must do in that case.
Can I sell with seller financing if I still have a mortgage?
It can be done as a wrap mortgage, where the buyer pays you and you keep paying your lender. But your loan’s due-on-sale clause still applies, so it carries the same risk as subject-to. Seller financing is simpler when the home is paid off. Federal rules also set conditions for some seller financed loans, so use an attorney.
Not legal advice. This guide is general information about Florida home sales. Laws change and every situation is different. Talk with a Florida attorney, tax professional, or insurance professional about your own case before you sign anything.
Tell us about the house. We will show you cash, terms and listing side by side, in writing. Subject to qualification, property inspection, and transaction terms.
See my optionsCall (305) 914-4191Sources
⌂ Equal Housing Opportunity. HOMKEYS LLC does not give legal or tax advice. Talk with a Florida real estate attorney or tax professional about your situation.