The short answer? Yes, you absolutely can.
If you’ve been lying awake at night, staring at the ceiling, thinking “Wait… I still owe money on this place am I even allowed to sell it?” take a breath. You’re not alone, and you’re definitely not stuck. Selling a home with a mortgage is super common. In fact, most people do it.
Let’s break it down in plain English no stiff legal talk, no guilt-tripping finance speak. Just the stuff you actually need to know.
So… How Does It Work?
Here’s the deal: when you sell your home, part of the sale proceeds go toward paying off whatever you still owe on your mortgage. This happens automatically at closing.
Let’s say your home sells for $400,000 and you still owe $280,000. At closing, your lender gets their $280K, and the rest (minus closing costs, commissions, etc.) goes to you. 🎉
It’s kind of like selling a car you’re still making payments on. You just need to settle up what’s owed before the title can fully transfer to someone else.
Real Life Example: “We Just Wanted to Move”
I met a couple, Emma and Nate, who bought their first house in 2020. Great starter home, small backyard, close to work. Fast forward to 2024 they had a toddler and another baby on the way. Suddenly that cute two-bedroom felt more like a hallway with doors.
They still had about 22 years left on their mortgage but decided to sell. Their home had appreciated enough that after paying off the mortgage and closing costs, they walked away with $85,000 for their next down payment.
No drama, no penalties. Just a normal home sale while still paying a mortgage.
What If Your Home’s Value Dropped?
This is where things can get tricky.
If you owe more than what your house is worth, you’re what’s called “underwater” or “upside down” on your mortgage. Selling is still possible, but you’d have to either:
Bring money to closing to cover the difference, or
Work with your lender on a short sale (which requires their approval and can affect your credit).
It’s not fun, but it’s not impossible either.
What About Closing Costs and Agent Fees?
Yep, you’ll still need to cover those, unless you negotiate differently with your buyer. That usually includes:
Real estate agent commissions (often 5–6%)
Title fees
Taxes
Miscellaneous closing costs
But again, these are typically paid out of the proceeds of the sale. No need to write a big check upfront unless you’re in that underwater situation.
Can I Sell and Buy at the Same Time?
You can, but prepare for a few mental gymnastics.
Some people sell first, then rent for a few months while house hunting. Others line up the purchase and sale to close on the same day. It’s a balancing act and you’ll need a solid real estate agent to help you juggle both sides without losing your mind.
You can also look into a bridge loan or home sale contingency if you need funds from your current home to buy the next one.
FAQ: Selling a House While Paying Mortgage
Q: Do I need to tell my mortgage lender I’m selling?
Not upfront, but they’ll be involved during closing to get paid. Your real estate agent and title company will coordinate with them.
Q: Will I owe taxes on the sale?
Possibly, but you may be eligible for the capital gains exclusion (up to $250K for single filers or $500K for married couples) if you’ve lived in the home 2 of the last 5 years. IRS capital gains info
Q: Can I sell a house in foreclosure?
Yes, but time is of the essence. Selling before the foreclosure process is complete could help you avoid lasting credit damage. Talk to your lender ASAP.
Q: Can I sell my house without a real estate agent?
Yes, it’s legal but be prepared to handle pricing, paperwork, negotiations, and legal compliance. For-Sale-by-Owner (FSBO) can work, but it’s not for the faint of heart.
Final Thought
Yes, you can sell your house while still paying a mortgage. And honestly? It’s not even unusual.
Whether you’re chasing a bigger backyard, moving for a job, or just craving a change, your mortgage doesn’t have to chain you down. As long as your home’s value covers what you owe (or close to it), you’re in a good spot.
And if you’re not sure where you stand? Start by checking your loan balance and getting a home value estimate (tools like Zillow’s Zestimate or Redfin can help).
Then talk to a local real estate agent or lender. There’s a path forward and it might be easier than you think.
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