What happens when you inherit a house with a mortgage?

Written by Michael FrankeLast reviewed: November 2, 2026

The mortgage stays on the house, but federal law stops the lender from demanding full payment just because the owner died and the house passed to a relative. Once the servicer confirms you as a successor in interest, you can keep making payments without refinancing, and you get the same servicing protections as a borrower. You can then keep the house, refinance it into your name or sell it, and if you sell, your tax basis is generally the home's value on the date of death.

Key facts

Garn-St Germain bars due-on-sale enforcement on a transfer to a relative at death, for homes with fewer than five units (12 U.S.C. 1701j-3).
A confirmed successor in interest is treated as a borrower under the servicing rules (12 CFR 1024.31).
Inherited property generally takes a basis equal to its value at death (26 U.S.C. 1014).

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The loan does not come due because of the death

Most mortgages have a due-on-sale clause. The Garn-St Germain Act stops lenders from enforcing it when a home with fewer than five units passes to a relative after the borrower dies, passes to a surviving joint tenant, or goes to a spouse or children (12 U.S.C. 1701j-3(d)). Payments still have to be made, though, or the loan can go into default like any other.

Your rights as a successor in interest

Contact the servicer, tell them the borrower died, and ask to be confirmed as a successor in interest. They will ask for a death certificate and proof of your ownership. Once confirmed, you count as a borrower for the servicing rules, so you can get loan information, ask for a payoff statement and apply for loss mitigation (12 CFR 1024.30, 1024.31).

The CFPB says successors have a right to keep paying and get loan information without assuming the loan or refinancing, and that servicers often push heirs to refinance anyway (CFPB).

Keep, refinance or sell

Who can sign the deed depends on your state's probate rules: in some states the heirs own the house at death, in others the estate's personal representative sells it. Our state guides explain each one: Indiana, Ohio, Wisconsin, Tennessee, Georgia. For help with the sale itself, see selling an inherited or probate house.

Keep it and pay the existing loan, often at a lower rate than you could get today.
Refinance into your own name if you want to change the terms or buy out other heirs.
Sell it. The mortgage is paid from the sale at closing, and gain is measured from the value at death, so a quick sale often owes little or no capital gains tax (IRS Publication 523).

Frequently asked questions

Do I have to pay off the mortgage if I inherit a house?

No. The lender cannot call the loan due because of the transfer to a relative at death. You do have to keep the payments current, or sell or refinance.

Can I take over my parent's mortgage?

Yes, in most cases you can keep paying it. Ask the servicer to confirm you as a successor in interest; you are not required to refinance.

Do I pay capital gains tax when I sell an inherited house?

Only on gain above the home's value at the date of death, in general. If you sell soon after inheriting, there is often little or none.

Sources

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

12 U.S.C. 1701j-3 (Garn-St Germain Act, due-on-sale limits) (Cornell Law School LII)
12 CFR 1024.31 (successor in interest) (Cornell Law School LII)
Homeowners face problems with mortgage companies after divorce or death of a loved one (2024) (Consumer Financial Protection Bureau)
26 U.S.C. 1014 (basis of inherited property) (Cornell Law School LII)
Publication 523, Selling Your Home (Internal Revenue Service)