Wraparound Mortgage Calculator
A wraparound mortgage lets the seller finance the buyer on top of their existing loan. Seller pockets the spread between the wrap rate and the underlying mortgage. This shows the math — and the due-on-sale risk.
| Wrap loan amount (price − down) | — |
| Wrap P&I (buyer pays seller) | — |
| Underlying P&I (seller still owes) | — |
| Monthly spread to seller | — |
| Annual seller cashflow | — |
| Effective seller yield | — |
A wraparound mortgage (or 'wrap') is a seller-financing structure where the seller's existing mortgage stays in place and the buyer makes payments to the seller covering the seller's mortgage plus a markup. Used in slow markets and creative-finance deals — but loaded with risk.
How Wraps Work
Seller has a $240K mortgage at 4.5%. Buyer wants the house at $400K but has only $40K down. Seller wraps: buyer signs a $360K wrap note at 8.5% to seller. Buyer pays seller monthly, seller continues paying the underlying lender. Seller pockets the spread.
Due-On-Sale Risk
Almost every conventional mortgage has a due-on-sale clause (Garn-St Germain Act exceptions exist for trusts and family transfers). If the lender discovers a wrap, they can accelerate the loan — full balance due. Risk is real and rising as lenders cross-reference deed transfers.
Seller's Yield Advantage
If the wrap is $360K at 8.5% over a $240K underlying at 4.5%, the seller earns the 4-point spread on $240K PLUS the full 8.5% on the $120K equity slice. Effective yield often exceeds 20% on seller equity.
Legal Protections
Use a contract for deed or all-inclusive trust deed (AITD) with a third-party servicer. Buyer's payments go through servicer who pays the underlying lender directly — reduces seller default risk. State laws vary; Texas treats wraps differently than California.
Last updated May 2026. Sources: Garn-St Germain Act, IRS Pub 537 Installment Sales.