Buy the property. Leave the mortgage where it is.
No bank. No credit. Next to nothing down.
A step-by-step walkthrough of subject-to investing — sometimes called the "Morby Method" after Pace Morby, who popularized it — how to take title to almost any property with little or none of your own cash at closing, and how to do it the way an attorney would sign off on.
What "subject to" actually means
You take the deed. The seller's existing mortgage stays exactly where it is — same lender, same rate, same name on the note. You make the payments, but you never apply for a loan and the debt is never legally yours. It's not a loophole; it's a property transfer that happens to leave a loan behind, and there are three ways to structure it.
Cash-to-loan
You pay the seller's equity gap in cash at closing, then take over the existing payment.
Cash needed: yes — covers the gapSeller carryback
You take the first mortgage subject-to, and the seller carries their remaining equity as a second-position note.
Cash needed: little to noneWraparound
The seller writes you a new note covering the full price; you pay them one payment and they forward the underlying mortgage.
Cash needed: little to noneOn the "no money out of pocket" part: it's real, but it depends on the equity gap, not the property type. A distressed seller with little or no equity is a true $0 close via Structure B or C. A property with a large equity gap still needs that gap covered — in cash, a private-money bridge, or a seller note — before it's subject-to and cash-free at the same time.
The method, in order
Every subject-to deal that closes clean runs through the same ten checkpoints. Skip one and it's usually the one that comes back to bite you at the title company.
Find the seller with a problem, not a listing
Distressed owner, low-rate mortgage already in place. The motivation matters more than the condition of the house — foreclosure timeline, job relocation, inherited property, burnt-out landlord.
Pull the loan details
Balance, rate, servicer, payment history. Get written authorization to speak to the servicer directly — you'll need it again after closing.
Run the numbers before you fall in love with the deal
Comps, rent or resale projection, and real cash flow after the inherited payment — not the payment you wish it were.
Walk the property
In person. Deferred maintenance and title issues both hide in the same houses.
Title search, loan status confirmed
Liens, judgments, HOA balances, and whether the loan is actually current — a "current" seller and a current loan are not always the same thing.
Total the real cost of getting in
Arrears if any, closing costs, insurance setup, a reserve for the first few months. This is the number that makes "$0 down" honest or dishonest.
Structure an offer around the seller's actual problem
Timeline relief, debt relief, or a clean exit — the structure (A, B, or C above) follows from what the seller needs, not a template.
Get state-specific paperwork from a real estate attorney
Purchase agreement, disclosures, and deed language differ by state — see Section 04. This is not the step to freehand.
Close through a licensed title company or attorney
Deed signed, notarized, and recorded with the county. A subject-to deal that never gets recorded isn't a subject-to deal — it's a handshake.
Bind insurance correctly, same day
Two policies: the seller's original policy stays active with the lender named as mortgagee; you bind your own landlord policy naming the seller as additional insured. A gap here is the fastest way to lose a house to a fire with no payout.
The correct way — and where it actually breaks
The due-on-sale clause is the whole legal conversation around subject-to, so it's worth saying plainly what it is and isn't.
Transferring title without lender consent is not fraud and not a crime. Under the Garn-St. Germain Depository Institutions Act of 1982, the due-on-sale clause gives the lender a contractual right to call the loan due on transfer — it's a civil remedy the lender can choose to use, not a criminal exposure for the buyer or seller.
In practice, servicers rarely call a loan that's being paid on time, because collecting interest on performing debt is the whole business. That's not a guarantee — loan sales, servicing transfers, or a securitization audit can surface the transfer and trigger acceleration. Structure every deal assuming that's possible, not assuming it won't happen.
Doing it legally isn't complicated, but it is non-negotiable:
- Disclose in writing, always. The seller signs acknowledging the mortgage stays in their name and what happens if you miss a payment.
- Attorney-drafted, state-specific documents — not a generic template pulled off a forum.
- Close through a licensed title company or real estate attorney, never a private closing between buyer and seller.
- Two insurance policies, correctly named — lender as mortgagee on the seller's policy, seller as additional insured on yours.
- A payoff or refinance deadline in writing (typically 24–36 months) that protects the seller's credit long-term.
- A licensed third-party loan servicer ($20–$50/month) so both sides have a verifiable payment record.
Disclosure law by state
A handful of states have written subject-to disclosure directly into their property codes. These are the ones with active statutes as of 2026 — always confirm current text with counsel before using in a contract.
Texas
Prop. Code §5.016Written notice required 7 days before contract signing, disclosing servicer, balance, rate, and payment — plus a bold-face due-on-sale warning.
Ohio
SB 155Written disclosure required before the contract is signed, stating plainly that the contract may be assigned to another buyer.
Oklahoma
SB 1075Plain-English disclosure mandated; recording a memorandum of contract to cloud title is prohibited outright.
North Carolina
HB 797Classifies residential wholesaling as brokerage activity — a real estate license is required to operate this way at scale.
This is module one
Subject-to is the foundation — everything else EphremStudio teaches (JV partnerships, seller finance, novations) builds on this same idea: control the property, structure around the seller's real problem, paper it correctly. More modules get added here as we build.