Due-on-Sale Clause
A due-on-sale clause lets a lender demand full repayment of a mortgage if the property is sold or transferred without the lender's consent.
What Due-on-Sale Clause means
This clause prevents buyers from informally taking over a seller's loan. It is why most conventional loans cannot be assumed. Government loans are exempt because they are formally assumable through the lender.
Florida example
A seller who tried to let a buyer simply take over a conventional loan triggered the due-on-sale clause, forcing the loan to be paid off and a new one obtained.
What it is
A due-on-sale clause lets the lender demand full payoff if you sell or transfer the home. It stops a buyer from simply taking over most loans.
Government loans are a common exception.
Why it matters
This clause is why most loans cannot be assumed. Knowing it helps you plan a sale or transfer.
We explain how it affects your options. Reach out and we will guide your next move.
Verify the details for your own situation against these government and agency sources: CFPB Owning a Home guide and HUD homebuyer resources.