Can you sell a house with a mortgage?

Written by Michael FrankeLast reviewed: November 2, 2026

Yes. You do not need your lender's permission to sell: the title company or closing attorney pays off your mortgage from the sale money at closing and you keep what is left. Your servicer must send a payoff statement within seven business days of a written request. If you owe more than the house will sell for, you either bring cash to closing or ask the lender to approve a short sale.

Key facts

No servicer approval is needed to sell; the sale pays the loan in full (CFPB).
Payoff statement due within 7 business days of a written request, with limited exceptions (12 CFR 1026.36).
Where allowed, prepayment penalties end after 3 years and are capped at 2%, 2% and 1% of the balance (12 CFR 1026.43).

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How the payoff works

When you accept an offer, the title company or closing attorney asks your servicer for a payoff statement showing the exact amount to clear the loan on the closing date, including interest. The servicer must send an accurate statement within seven business days of a written request; loans in bankruptcy or foreclosure, reverse mortgages and disaster situations get "a reasonable time" instead (12 CFR 1026.36).

At closing, the mortgage payoff and any other liens appear on the seller's side of the settlement statement and are paid before you receive anything (12 CFR 1026.38). The lender then releases its lien.

Prepayment penalties

Most home loans today have no prepayment penalty. For loans covered by the federal ability-to-repay rule, a penalty is allowed only if state law permits it, the rate is fixed, the loan is a qualified mortgage and it is not a higher-priced loan. Even then it cannot apply after three years and is capped at 2% of the amount prepaid in years one and two and 1% in year three (12 CFR 1026.43). Check your note or ask your servicer.

If you owe more than the house is worth

You can still sell. Either you bring the difference to closing, or you ask the lender to accept less than the full balance in a short sale, which the CFPB describes as a form of loss mitigation. If your state would let the lender sue you for the shortfall, ask for a written waiver of the deficiency as part of the approval (CFPB).

If you are behind on payments, read can you sell a house in foreclosure? as well.

Frequently asked questions

Do I need my lender's permission to sell my house?

No, as long as the sale pays the loan off in full. You need the lender's approval only for a short sale, where the price is less than you owe.

How do I find out how much I owe?

Ask your servicer in writing for a payoff statement for your expected closing date. It must arrive within seven business days in most cases.

Can I sell my house with a second mortgage or home equity line?

Yes. Every lien, including a second mortgage or HELOC, is paid from the sale at closing in order of priority.

Sources

Checked against each source on November 2, 2026. This page is general information, not legal or tax advice.

Avoid foreclosure (Consumer Financial Protection Bureau)
12 CFR 1026.36(c)(3) (payoff statements) (Consumer Financial Protection Bureau)
12 CFR 1026.43(g) (prepayment penalty limits) (Cornell Law School LII)
12 CFR 1026.38(k) (seller transactions on the Closing Disclosure) (Cornell Law School LII)
What is a short sale? (Consumer Financial Protection Bureau)