Which type of loan is most likely to include a due-on-sale clause?

A conventional home loan is most likely to include a due-on-sale clause because it is a standard feature in most conventional mortgage agreements. This clause gives the lender the right to demand full repayment of the loan if the property is sold or transferred without the lender's consent. This is important for lenders as it allows them to maintain control over the loan terms and to ensure that they can assess the financial qualifications of any new borrower.

Due-on-sale clauses are designed to protect lenders from the potential risk of a borrower transferring their mortgage to someone who may not qualify for the loan or who poses a higher risk. In contrast, FHA and VA loans typically have more flexible terms due to government backing, and while they can have due-on-sale clauses, it is less common than in conventional lending. Subprime loans often have different considerations due to their higher risk profiles but may also include a due-on-sale clause as part of their terms, albeit this is not as typical as in conventional loans. Thus, the likelihood of encountering a due-on-sale clause is most prevalent with conventional home loans.