When the bank says no, structure a yes.
Five creative-financing strategies we use in Central Texas. Click any to see the mechanics and an example.
Deal Smith Realty is a Round Rock, Texas brokerage that structures creative-finance deals: subject-to, seller financing, wraparound mortgages, lease options and novations. The brokerage has closed over 100 of them across Central Texas, and most never went on the MLS.
By Derek Smith, designated broker, TREC #714810 · Last updated
Five structures. How they work.
When the bank says no, structure a yes. Click any to see the mechanics and an example.
Take over the seller's existing mortgage. The loan stays in their name, but the deed, and the payments, come to you. You inherit their rate.
When a homeowner sells their property "subject to" an existing mortgage, title transfers but the loan stays in place. The buyer makes the seller's payments going forward. Sellers who don't care about their credit line (e.g. they've already bought their next home) can move without refinancing. Buyers get a lower-than-market rate.
This is legal, documented, and coordinated through title. Every deal is done with full disclosure, an authorization-to-release on the loan, and due-on-sale risk mitigation in place.
Best for
- Buyers chasing rate
- Sellers already moved out
- Low-equity situations
- Transfer speed < 30 days
The seller is the bank. They hold a private note you pay directly, with negotiated terms, no institutional lender involved.
In a seller-financed deal, the owner carries the paper themselves, they become your lender, with terms you negotiate together (rate, amortization, balloon, prepayment). A wrap-around mortgage layers a new seller-held note over an existing loan; the buyer's payment covers both.
Seller financing lets self-employed buyers, investors, and credit-builders close without bank underwriting. Sellers earn yield on their equity, defer capital gains across the note's life, and often fetch above-market prices in exchange for flexibility.
Best for
- Self-employed buyers
- Sellers wanting cash flow
- Above-market pricing
- Defer capital gains
Rent the home now, buy it later at a locked-in price. A bridge structure that gives buyers time and gives sellers occupancy.
A lease-option is two agreements stacked: a standard lease, plus an option to purchase at a set price within a set window (typically 12–36 months). A portion of each month's rent can be credited toward the future purchase.
This works for buyers who need time, to sell their current home, clean up credit, build down payment, while locking price in a rising market. Sellers keep the property occupied, earn rent, and have a qualified buyer in the wings.
Best for
- Buyers needing 12–24mo runway
- Credit rebuild scenarios
- Relocation bridge
- Landlords wanting an exit
A three-party agreement that replaces the original buyer or seller contract with a new one, useful for assignments, rehab-before-close strategies, and complex closings.
A novation legally substitutes one party for another in an existing contract, with the consent of everyone involved. In real estate it's often used when a wholesaler needs to transfer their contract to an end buyer cleanly, or when an investor wants to rehab a property during the contract period with the seller's blessing.
Unlike a simple assignment, novation fully releases the original party, there's no residual liability. It's cleaner, more transparent, and reads better at title than an assignment fee disclosure.
Best for
- Wholesaler → end buyer
- Pre-close rehab
- Multi-party investor deals
- Clean title handoff
When no single structure fits, we stack: sub-to on the existing loan, seller-finance on the equity, sometimes a second lien. Built for complex portfolios and unique situations.
Most interesting deals don't fit one box. A seller with a low-rate mortgage and a lot of equity might do better with a split structure: buyer takes the loan sub-to, and the seller carries the equity portion as a second-position note at market rate.
This is what we spend most of our time on. Every structured deal is underwritten in a spreadsheet, reviewed by the title company, and papered with standard TREC forms plus custom addenda. We walk you through every line before you sign anything.
Best for
- High-equity sellers
- Portfolio investors
- Tax-sensitive exits
- 1031-exchange coordination
Creative financing in Texas, the common questions.
Yes. A seller can deed a house to a buyer while the seller's loan stays in place and the buyer makes the payments.
Texas Property Code Section 5.016 adds a notice rule. At least seven days before the contract is signed or the deal closes, whichever comes first, the seller has to give the buyer and each lienholder a written statement covering the loan balance, rate, payment, insurance and property taxes. A buyer who signed without it can cancel within seven days of receiving it. The notice isn't required if the buyer gets a title policy insuring the transfer, or if the buyer has bought or sold real estate four or more times in the past 12 months.
Most mortgages let the lender call the loan due when the house is sold, and federal law (the Garn-St Germain Act, 12 U.S.C. 1701j-3) lets lenders enforce that clause. The act protects some transfers, such as to a spouse or into the borrower's own living trust, but a sale to an unrelated buyer isn't one of them.
Lenders rarely call a loan that's being paid on time, but they can. Before anyone signs, we go through that risk with both sides and what each would do if the lender called the loan, and both sides sign a written disclosure of it.
A wrap is seller financing layered over a loan the seller already has. The buyer pays the seller on a new note, and the seller pays the original lender out of that payment and keeps the difference. Because the old loan stays in place, a wrap carries the same due-on-sale risk as subject-to.
Texas regulates residential wraps under Finance Code Chapter 159. A seller who makes more than three wrap loans in 12 months has to be licensed or registered with the Texas Department of Savings and Mortgage Lending. Unless an exemption applies, the buyer also gets a written property-insurance notice at least seven days before signing, and the seller has to hold the buyer's payments in trust and use them to pay the underlying loan.
Most start with the TREC One to Four Family Residential Contract (Resale). Seller financing adds the TREC Seller Financing Addendum, and a deal where the buyer takes over the seller's loan often uses the TREC Loan Assumption Addendum. Custom addenda cover whatever the standard forms don't, and the title company records the deed and any new deed of trust.
It depends on how many seller-financed loans the seller makes. Under Texas Finance Code Section 180.003, an owner can finance the sale of their own property without a loan originator license if they make no more than three of those loans in any 12 months. Owners tied to the same company count as one owner. Past three, Texas requires a licensed residential mortgage loan originator (RMLO).
Dodd-Frank sets the loan terms through Regulation Z (12 CFR 1026.36). A seller who finances three or fewer properties in 12 months needs a fully amortizing loan with no balloon, a good-faith finding that the buyer can repay, and a fixed rate or one that can't adjust for at least five years. A person, estate or trust financing only one property in 12 months can include a balloon, as long as the loan never negatively amortizes and the same rate rule is met.
These consumer rules cover loans to people buying a home to live in. A loan for business purposes, such as an investor buying a rental, generally falls outside them. We sort out which rules apply before the note gets written.
Subject-to and seller-financed deals can close in under 30 days because no bank has to underwrite a new loan. The title work usually sets the pace, and a messy title takes longer.
Derek Smith is the go-to partner and broker for T. Alan Ceshker, an Austin real estate attorney who runs his own title office. When a deal needs custom paperwork, the attorney drafting it and the broker structuring it already work together. Alan's wrap and subject-to FAQ covers the legal side in more depth.
Over 100, and Derek has closed over 200 deals himself. Most of them never went on the MLS, so you won't find them on Zillow or Redfin. On a call, we can walk you through deals that look like yours.
Yes. We're based in Round Rock and work across Central Texas, including Austin, Georgetown, Pflugerville, Cedar Park, Leander, Hutto, Kyle and San Marcos, plus San Antonio, Corpus Christi and Baytown.
Have a deal that doesn't fit the box?
We structure creative deals every week. Book a free consult and we'll tell you, honestly, whether creative financing makes sense for your situation.