⚡ Quick Answer: What is an Assumable Mortgage?
An assumable mortgage lets you take over the seller's existing loan—including their interest rate, remaining balance, and terms. With rates locked at 3-4% from 2020-2021, you could save $500-800/month compared to today's 6%+ rates. VA, FHA, and USDA loans are assumable. Conventional loans typically are not.
📋 In This Guide
💰 How Much Can You Actually Save?
Let me show you the real math. This is why assumable mortgages are exploding in popularity:
Real Example: $400,000 Home Purchase
| Scenario | Interest Rate | Monthly Payment | Total Interest (30yr) |
|---|---|---|---|
| New Mortgage (2026) | 6.10% | $2,421 | $471,560 |
| Assumed Mortgage (3.25%) | 3.25% | $1,740 | $226,400 |
| YOUR SAVINGS | 2.85% lower | $681/month | $245,160 total! |
🎯 Bottom Line: Assuming a 3.25% mortgage instead of getting a new 6.10% loan saves you $681/month and $245,160 in total interest over 30 years.
📊 Which Mortgages Are Assumable?
✅ ASSUMABLE
- ✓VA Loans - Anyone can assume (non-veterans too!)
0.5% funding fee for assumptions
- ✓FHA Loans - Must meet FHA credit requirements
580+ credit score, 43% DTI max
- ✓USDA Loans - Must meet income/location requirements
Property must be in eligible rural area
❌ NOT ASSUMABLE
- ✗Conventional Loans - Due-on-sale clause
Fannie Mae/Freddie Mac loans cannot be assumed
- ✗Jumbo Loans - Lender-specific terms
Most have due-on-sale clauses
- ✗Most Private Loans - Varies by lender
Check your loan documents
💡 Pro Tip: About 25% of all mortgages are government-backed (VA, FHA, USDA) and therefore assumable. That's roughly 12 million homes with potentially assumable loans!
📝 How to Assume a Mortgage: Step-by-Step
Find an Assumable Mortgage Home
Search for homes with VA, FHA, or USDA loans. Ask your real estate agent to filter for government-backed loans or use specialized platforms like Roam or Assumable.io.
→ Get matched with assumable mortgage specialistsGet Pre-Approved for the Assumption
Contact the seller's lender to start the assumption process. You'll need to qualify based on credit score, income, and debt-to-income ratio—similar to a new mortgage.
Timeline: 1-2 weeks for initial approval
Cover the Equity Gap
You'll need to pay the difference between the home's price and the remaining loan balance. Options include: cash, second mortgage, HELOC, or seller financing.
Example: Home price $450K, remaining loan $320K = $130K equity gap to cover
Complete Underwriting & Close
The lender will verify your financials, order an appraisal, and process the assumption. Once approved, you'll sign documents transferring the loan to your name.
Timeline: 45-90 days total (longer than traditional mortgages)
🔍 How to Find Homes with Assumable Mortgages
🌐 Online Platforms
- • Roam - Largest assumable mortgage marketplace
- • Assumable.io - VA/FHA loan listings
- • Zillow/Redfin - Filter by "VA eligible" or "FHA"
👤 Work with Specialists
- • Real estate agents specializing in VA/FHA
- • Mortgage brokers with assumption experience
- • Military relocation specialists (for VA loans)
🎯 Search Tips
- • Look for homes purchased between 2020-2022 (lowest rates)
- • Military base areas have high concentrations of VA loans
- • Ask sellers directly if their loan is assumable
- • Check MLS listings for "assumable" or "VA/FHA" keywords
✅ Do You Qualify? Requirements by Loan Type
| Requirement | VA Loan | FHA Loan | USDA Loan |
|---|---|---|---|
| Credit Score | 620+ (lender varies) | 580+ minimum | 640+ recommended |
| DTI Ratio | 41% (can go higher) | 43% maximum | 41% maximum |
| Military Status | NOT required! | N/A | N/A |
| Income Limits | None | None | 115% of area median |
| Assumption Fee | 0.5% funding fee | $500-$1,000 | $500-$1,000 |
🎉 Great News for Non-Veterans!
Anyone can assume a VA loan—you don't need to be a veteran! This is one of the biggest misconceptions about VA loan assumptions. However, if a non-veteran assumes the loan, the original veteran's entitlement remains tied up until the loan is paid off.
💵 Costs & Fees: What You'll Pay
Assumption Costs vs. New Mortgage Costs
| Fee Type | Assumption | New Mortgage |
|---|---|---|
| Origination Fee | $0 | $3,000-$6,000 |
| Assumption/Processing Fee | $500-$1,500 | N/A |
| VA Funding Fee (if VA) | 0.5% of loan | 1.25-3.3% of loan |
| Appraisal | $400-$700 | $400-$700 |
| Title Insurance | $1,000-$2,000 | $1,000-$2,000 |
| TOTAL (on $400K loan) | $3,900-$6,200 | $12,000-$20,000 |
💰 Savings on Closing Costs: You'll save approximately $8,000-$14,000 in closing costs by assuming a mortgage instead of getting a new one!
⚖️ Pros & Cons of Assumable Mortgages
✅ PROS
- ✓Lower interest rate - Lock in 3-4% vs 6%+
- ✓Lower closing costs - Save $8K-$14K
- ✓Massive monthly savings - $500-$800/month
- ✓Negotiating leverage - Sellers may accept lower price
- ✓No new appraisal required (sometimes)
❌ CONS
- ✗Large equity gap - Need cash or second mortgage
- ✗Longer process - 45-90 days vs 30-45 days
- ✗Limited inventory - Only 25% of loans are assumable
- ✗Lender cooperation needed - Some are slow
- ✗VA entitlement issues - For veteran sellers
Ready to Save $500+/Month?
Get matched with lenders who specialize in mortgage assumptions. Compare rates and find assumable homes in your area.
❓ Frequently Asked Questions
Can anyone assume a VA loan?
Yes! You don't need to be a veteran to assume a VA loan. However, if a non-veteran assumes the loan, the original veteran's VA entitlement remains tied to that property until the loan is paid off or refinanced.
How long does the assumption process take?
Typically 45-90 days, which is longer than a traditional mortgage (30-45 days). The extra time is needed for the lender to process the assumption paperwork and verify your qualifications.
What if I can't cover the equity gap?
You have several options: get a second mortgage or HELOC, negotiate seller financing, use a larger down payment, or find a home with less equity built up (newer purchases from 2021-2022).
Are conventional loans ever assumable?
Rarely. Most conventional loans have a "due-on-sale" clause that requires the loan to be paid off when the property is sold. However, some older conventional loans (pre-1988) may be assumable—check the original loan documents.
Will assuming a mortgage affect my credit?
Yes, the lender will do a hard credit inquiry, which may temporarily lower your score by a few points. Once you assume the loan, it will appear on your credit report like any other mortgage, helping build your credit history with on-time payments.
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Sarah Mitchell
Senior Mortgage Analyst • 12+ Years Experience
Sarah specializes in VA and FHA loans, helping thousands of homebuyers navigate the mortgage process. She's a certified mortgage planning specialist and regular contributor to mortgage industry publications.