Wraparound Mortgage Calculator
Calculate buyer payments, seller monthly spread income, and total profit on a wraparound (all-inclusive trust deed) mortgage. Analyze due-on-sale risk, legal structure options, and exit strategies.
Existing Mortgage (Seller Keeps This)
$
%
yrs
Wrap Loan (New Terms between Buyer and Seller)
$
$
%
Seller Monthly Spread (Profit)
$728/mo
Buyer pays $1,707/mo · Seller pays bank $979/mo · Rate spread: 3.0%
Buyer Monthly Payment
$1,707
Seller Pays to Lender
$979
Seller Monthly Spread
$728
Wrap Loan Amount
$270,000
Seller Total Net Spread
$356,013
Rate Spread
3.0% (3.5% → 6.5%)
Advanced
Advanced Calculator
How wraparounds work mechanically, buyer vs seller analysis, due-on-sale risk assessment
A wraparound mortgage is a seller-financing structure where the seller keeps their existing mortgage and wraps a new, larger loan around it.
Payment Flow Diagram
BUYER
Pays $1,707/mo
at 6.5%
→
SELLER
Keeps $728/mo spread
Forwards balance
→
LENDER
Receives $979/mo
at 3.5%
The seller profits from the 3.0% rate spread: charging 6.5% while paying 3.5%
The Wrap Loan
Sale price: $300,000
Down payment: $30,000
Wrap balance: $270,000
Buyer rate: 6.5%
Buyer payment: $1,707/mo
Down payment: $30,000
Wrap balance: $270,000
Buyer rate: 6.5%
Buyer payment: $1,707/mo
The Existing Mortgage
Existing balance: $180,000
Remaining term: 22 years
Existing rate: 3.5%
Seller payment: $979/mo
Seller keeps title until payoff
Remaining term: 22 years
Existing rate: 3.5%
Seller payment: $979/mo
Seller keeps title until payoff
Pro
Professional Simulator
Seller spread ROI analysis, legal structure comparison, exit strategy planning
Seller total profit analysis: monthly spread income plus principal paydown benefit:
Monthly Spread Income
$728
Buyer payment minus existing mortgage
Annual Spread Income
$8,736
Total Spread Over Term
$356,013
Over 30 years
Extra Income After Existing Payoff
$163,832
8 years at full buyer payment
Down Payment Collected
$30,000
Cash received at closing
Total Seller Return
$386,013
Net spread + down payment
Seller ROI: The $30,000 down payment plus $728/mo spread represents a 3.2% annualized yield on the wrap balance of $270,000. After the existing mortgage pays off in 22 years, seller collects the full $1,707/mo for the remaining 8 years.
How to Use This Wraparound Mortgage Calculator
Enter the Existing Balance, Existing Rate, and Existing Term Remaining on the seller's current mortgage — this is the loan that stays in place. Then enter the Wrap Sale Price, Down Payment, Wrap Interest Rate, and Wrap Term for the new agreement between buyer and seller. The calculator shows the buyer's monthly payment, the seller's payment to the bank, and the seller's monthly spread profit.
Wraparound mortgages (also called all-inclusive trust deeds or AITDs) work because the seller has a low-rate existing mortgage and charges the buyer a higher rate — keeping the difference as passive income without needing bank approval.
Wraparound Mortgage Calculation
Wrap Loan Amount = Sale Price − Down Payment
Buyer Monthly Payment = PMT(Wrap Rate, Wrap Term, Wrap Loan Amount)
Seller Payment to Bank = PMT(Existing Rate, Existing Remaining Term, Existing Balance)
Seller Monthly Spread = Buyer Payment − Seller Payment to Bank
Rate Spread = Wrap Rate − Existing Rate
Buyer Monthly Payment = PMT(Wrap Rate, Wrap Term, Wrap Loan Amount)
Seller Payment to Bank = PMT(Existing Rate, Existing Remaining Term, Existing Balance)
Seller Monthly Spread = Buyer Payment − Seller Payment to Bank
Rate Spread = Wrap Rate − Existing Rate
Example: $300,000 Wraparound
Seller has 3.5% mortgage; Buyer pays 6.5% on wrap
| Existing Balance | $180,000 at 3.5% |
| Seller's Monthly Payment (to bank) | $1,054/mo |
| Sale Price | $300,000 |
| Down Payment | $30,000 |
| Wrap Loan | $270,000 at 6.5% / 30 years |
| Buyer Monthly Payment (to seller) | $1,707/mo |
| Seller Monthly Spread | $653/mo profit |
| Seller Total Net Over 30 Years | ~$235,000 |
The seller earns $653/month passive income from the 3% rate spread — without getting a new mortgage or paying capital gains tax immediately (installment sale reporting).
Frequently Asked Questions
A wraparound mortgage (also called an all-inclusive trust deed or AITD) is a seller-financing structure where the seller keeps their existing mortgage and creates a new, larger loan for the buyer at a higher interest rate. The buyer makes payments to the seller; the seller continues paying the original lender. The seller profits from the rate spread — the difference between what the buyer pays and what the seller pays the bank. It requires no bank approval for the buyer and is most common when the seller has a low-rate assumable-style mortgage.
Most mortgages originated after 1982 contain a due-on-sale clause, which allows the lender to demand full repayment of the existing mortgage when the property is sold or transferred. In a wraparound, the transfer of ownership (even through a land contract) can trigger this clause. If the lender discovers the wrap and enforces it, the full existing balance becomes immediately due. The risk is highest when the existing rate is far below current market rates — the lender has financial incentive to call the loan and reissue at current rates. Risk mitigation includes using a loan servicer, using a land contract structure where title does not transfer immediately, and consulting a real estate attorney familiar with your state's laws.
Wraparound mortgages are legal in most states, but they may violate the due-on-sale clause in the existing mortgage — which is a contract issue, not a criminal one. Texas, California (via AITD), and Colorado have established legal frameworks for seller financing and wraparounds. Some states have additional disclosure and licensing requirements for sellers who offer financing. Always use a real estate attorney to draft the note and deed, use a neutral third-party loan servicer, and get title insurance. Never structure a wraparound on a handshake or without professional legal help.
Buyers benefit from: (1) No bank qualification — useful for self-employed buyers, recent credit events, or non-QM borrowers who cannot qualify for conventional financing. (2) Potentially below-market interest rate compared to current conventional rates. (3) Faster closing without bank underwriting, appraisals, or approval delays. (4) Flexible terms negotiated directly with the seller. The main risk for buyers is that the seller could stop paying the underlying mortgage, putting the buyer's home at risk — mitigation is using a professional loan servicer who pays the underlying lender directly from the buyer's payment.
Seller financing is the broad category — any time the seller acts as the lender. A wraparound is a specific type of seller financing where the seller's existing mortgage stays in place and the new seller-held loan "wraps around" it. Standard seller financing usually requires the seller to own the property free and clear (no existing mortgage) or to pay off the existing mortgage at closing. Wraparounds allow the seller to retain the existing low-rate mortgage and profit from the interest rate spread — making them valuable when the seller has a below-market rate loan they do not want to pay off.