Help with Nginx Internal Redirect Based on Subdomain Validation

I'm trying to set up an NGINX server block to handle requests based on subdomain validation. Here’s what I’m aiming for:

Incoming Request: A request comes in with a subdomain (e.g., jiffy.example.com). Validation: The subdomain gets validated by my backend API which is an upstream server(http://backend_api/api/user/validate/$subdomain). The API responds: 200 OK if the subdomain is valid. 404 Not Found if the subdomain is invalid. Internal Redirects: Based on the API response, NGINX should: Route valid subdomains to a @userPage location (proxying to a userPage service). Route invalid subdomains to a @not_found location (proxying to a custom "not found" page).

Here's what I have so far:

``` server { listen 443 ssl; server_name ~^(?.+)\.${USERPAGE_SERVER_NAME}$;

    ssl_certificate ${SSL_CERT_PATH};
    ssl_certificate_key ${SSL_KEY_PATH};

    ssl_protocols TLSv1.2 TLSv1.3;
    ssl_prefer_server_ciphers on;
    ssl_ciphers HIGH:!aNULL:!MD5;

    # Validate the subdomain
    location / {
        
        set $validation_url http://backend_api/api/user/validate/$subdomain;

        proxy_cache valid_subdomains;
        proxy_cache_key "$subdomain";
        proxy_pass_request_headers off;
        proxy_set_header Host $host;
        proxy_pass $validation_url;

    }    

    # Handle valid subdomain redirect
    location @userPage {
        proxy_pass https://${DEVELOPMENT_USERPAGE_URL};
    }

    # Handle invalid subdomain redirect
    location @not_found {
        proxy_pass https://${DEVELOPMENT_NOT_FOUND_URL};
    }
  }

```

What am i doing wrong here? I read about X-Accel-Redirect flag but I am not able to understand how to capture that flag in the response header if I send it as a response header from my api?

Any help would be appreciated.