Due-on-sale clause
A clause in most mortgages saying the full balance becomes due if the property is sold or transferred. Why most conventional loans can't just be taken over by the next owner.
Every term like this one lights up in the step you're on.
Free to set up. No credit card.Part 1 of 4
Why a seller cares
Nearly every conventional mortgage has one, and it is why a buyer cannot quietly take over your payments. It also makes informal deals, a land contract or a wraparound, riskier than they look.
Part 2 of 4
A simple example
A buyer proposes taking over your $220,000 loan at 3% while you keep it in your name. Your loan's due-on-sale clause lets the lender call the whole balance if title transfers.
| What is proposed | What the clause allows |
|---|---|
| Deeding the home while your loan stays | The lender may demand the full $220,000 at once |
| A formal assumption approved by the lender | Allowed; the clause is waived by the lender's own process |
| Paying the loan off at closing | The ordinary sale; the clause never comes up |
The clause is the lender's veto over a change of owner. It is rarely used and always there.
Part 3 of 4
What people get wrong
That lenders never enforce it. They rarely need to, and a rate far below market is exactly the case where one might.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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