“Subject to” is short for “subject to existing financing.” A subject to property can be purchased as long as both parties agree that the existing mortgage will stay in place. Purchasing a subject to property means you will have to finish paying off the previous owner’s mortgage besides making a small down payment in most cases.
The main advantage is that sellers offering a “subject to” property are usually trying to get rid of it quickly. This could provide you with the opportunity to negotiate a low down payment or even to buy a home with no money down if the remaining balance on the mortgage is important.
Look for pre-foreclosure properties, since sellers usually want to get rid of these properties as quickly as possible and will probably take the first reasonable offer you make.
Before purchasing a “subject to” property, go over the loan terms carefully. The loan terms should not include a due on sale clause, since this type of clause requires the remaining balance of the loan to be paid when the owner changes.