If you already have equity in your home but you need to relocate or are interested in purchasing a new home, you may want to sell a house with a mortgage that hasn’t yet been paid off. Fortunately, this is entirely possible and many people go through the process of selling a house with an outstanding mortgage.

    While you can sell a house that hasn’t been paid off, it may require a few more steps than selling a house that’s been paid for. Whether selling a house with a mortgage is a good financial decision will also depend on factors such as the amount of equity you’ve built, market conditions, and interest rates. Nevertheless, selling a house on a mortgage is a fairly straightforward process.


    • You can sell your house without completely paying off your mortgage. The most common way to do this is to use the proceeds from the property’s sale to pay off the remaining mortgage.
    • To begin the process of selling your home, request a payoff statement and calculate the amount of equity you’ve built in the home.
    • After selling a home with a mortgage, you’re required to first pay off the remaining home loan balance and then any other liens, transaction costs, and closing costs.

    Can You Sell a House Before Paying It Off?

    Yes, it is possible to sell your house before it’s fully paid off. You may need to do this for one or more reasons: moving for a friend, family member, or job, downscaling as an empty nester, upscaling to expand your family, or a preference for another type of neighborhood, setting, or location.

    Selling a house with a mortgage is typical and, depending on how much you have already paid, you can even pay off the balance of your mortgage this way. There are several ways that selling a house with a mortgage is possible. Ideally, you’ll be able to sell a house with a mortgage by using the equity you’ve already built in your home to cover what’s owed after the sale.

    With a simple 10-step mortgage process, Griffin Funding strives to make applying and securing a home loan easy, transparent, and quick.

    Get Started

    How to Sell a House With a Mortgage

    You can sell a house with a mortgage by using the equity you have in the home to pay off the balance of your loan, along with any closing costs that come when you sell the house. You can keep whatever money is left over after paying these expenses. Oftentimes, sellers will use a portion of the remaining proceeds from the house’s sale as a down payment on a new mortgage.

    Keep in mind that some loans come with early payment or prepayment penalties, so it’s important to evaluate the terms of the mortgage you have. Your real estate agent or their conveyancer (a real estate administrator who deals with the financial aspects of real estate transactions) may be able to help you navigate this.

    With that being said, the basic steps involved with selling a house with a mortgage are as follows:

    Request a payoff statement

    The first step in selling a home with a mortgage is contacting your lender and asking for a payoff statement. A payoff statement will let you know how much you’ve paid into your mortgage, how much is left to pay, and how much of the remaining balance is interest versus principal. Some lenders refer to this as a payoff demand.

    With a payoff statement in hand, you’ll know how much you have to pay to satisfy the obligations of your loan. This document will show you how much you owe, but you’ll also get a detailed list of fees and a date of expiry. Once that date passes, your payoff statement is no longer valid, and you will have to request a new one.

    You’ll want to make sure you have your payoff statement before you sell your home, especially if you’re rolling some proceeds into a more expensive property. The type of mortgage you have may impact the equity you’ve built and the fees associated with paying off the loan early. For instance, non-conforming loans or non-qualified mortgages may have terms and fees that are different from those attached to traditional home loans.

    Download the Griffin Gold app today!

    Take charge of your financial wellness and achieve your homeownership goals

    Calculate your home equity

    Home equity is a key metric when it comes to selling a house with a mortgage. Home equity is defined as the difference between your home’s market value and the amount you still owe on your mortgage. Understanding your equity amount is critical, as you can use that to pay off your existing loan and closing fees.

    A model home sits on one side of a scale while rolls of cash sit on the other.

    By calculating your home equity, you can determine your financial stake in the home. If you don’t have enough equity to pay off your mortgage, then you may reconsider selling your home or seek out other options, such as getting your lender to agree to a short sale.

    List your property for sale

    Your next step is to list the home for sale to find a buyer. Your home must be valued over the cost of your balance. Most people sell their homes through a local real estate agent who is experienced in selling a house with a mortgage, but you can also try your hand at selling the home yourself via a for sale by owner (FSBO) transaction.

    Sell your home and pay off the remaining mortgage

    Once you sell your home, there is an order of repayment. First is the loan, which takes the first lien position. This means that you are obligated to pay off the mortgage before anything else if the home is sold, and this money goes straight to your mortgage lender.

    After that, you’ll be required to handle any other liens and loans as well as transaction costs, real estate agent commissions, and closing costs. If there’s money left after that—which is likely if you’ve paid more than half of your loan and the market’s trended upwards since you purchased the home—it’s yours to keep.

    Most people choose to put this money towards a down payment on their next home, but the choice is yours.

    Reach Out to Learn More About Selling a House With a Mortgage

    Selling a house with a Non-QM or traditional mortgage may seem like an intimidating process, but it’s something commonly done. At Griffin Funding, we can help you navigate the process, refinance your home, or finance your next home. If you need help deciphering your payoff statement and calculating your home equity, we’re here to help.

    Having trouble qualifying with other lenders?

    Apply Online Today

    Frequently Asked Questions

    Can you transfer a mortgage to another house?

    No, you cannot transfer a mortgage to another house. While “porting a mortgage”, as this practice is referred to, is possible in other countries like Canada or the United Kingdom, you generally cannot transfer a mortgage to another house in the United States.

    Can you transfer a mortgage to another person?

    Whether you can transfer a mortgage to another person depends entirely on the terms of your mortgage. If you have what's called an "assumable" mortgage, another borrower can take over your loan by paying a flat fee. However, that person still needs to qualify for the mortgage with your lender. Generally, VA and FHA loans, which are government-backed, are assumable.

    What is negative equity?

    If you have negative equity, it means you owe more on your home than it could currently sell for. You may have heard this referred to as "being underwater" on your mortgage or other type of loan. You can still sell your home with a mortgage if it's underwater, but to do so you may need to consider a short sale.

    A short sale involves selling your home for less than what you currently owe on it. To do this, you need to get the lender's approval. If you might default on the loan without a short sale, the lender may agree. But, if you're not dealing with financial hardship, you will have a difficult time getting lender approval.

    This is why short sales are considered a last resort. In addition, they can harm your credit, and consequently, your ability to obtain more loans in the future.
    Bill Lyons

    Bill Lyons is the Founder, CEO & President of Griffin Funding. Founded in 2013, Griffin Funding is a national boutique mortgage lender focusing on delivering 5-star service to its clients. Mr. Lyons has 22 years of experience in the mortgage business. Lyons is seen as an industry leader and expert in real estate finance. Lyons has been featured in Forbes, Inc., Wall Street Journal, HousingWire, and more. As a member of the Mortgage Bankers Association, Lyons is able to keep up with important changes in the industry to deliver the most value to Griffin's clients. Under Lyons' leadership, Griffin Funding has made the Inc. 5000 fastest-growing companies list five times in its 10 years in business.