What Is an Assumable Mortgage? (And Why It's Your Secret Weapon)
An assumable mortgage lets you take over the seller's existing loan—including their interest rate. If they locked in 3% back in 2021, you get that 3% rate. Not a new loan at today's 7%. The SAME loan.
✅ Which Loans Are Assumable?
FHA
All FHA loans are assumable
VA
All VA loans are assumable
USDA
All USDA loans are assumable
❌ Conventional loans are NOT assumable (with rare exceptions)
🎯 The Opportunity Right Now
Between 2020-2022, millions of homeowners locked in rates between 2.5% and 4%. Many of these homeowners now want to sell but are "rate locked"—they don't want to give up their low rate. An assumable mortgage solves this: you get their rate, they get to sell. Win-win.
How Mortgage Assumption Works: Step-by-Step
Find a Home with an Assumable Loan
Look for FHA, VA, or USDA properties. Use platforms like Roam, AssumeList, or ask your agent to filter listings.
Verify the Loan Details
Confirm the interest rate, remaining balance, and years left on the loan. The seller should provide this information.
Calculate the "Gap"
The assumable loan probably won't cover the full purchase price. You'll need cash or a second loan for the difference.
Apply for Assumption with the Lender
You must qualify with the original lender. They'll check your credit, income, and DTI just like a new loan.
Pay the Assumption Fee
Typically $500-$1,000 for FHA, 0.5% of loan balance for VA. Much less than new loan closing costs.
Close and Take Over the Loan
Once approved, you assume the loan with all original terms. The seller is released from liability.
The "Gap" Problem (And How to Solve It)
Here's the catch: the assumable loan balance is usually less than the home's current value. You need to cover the difference—called the "gap."
📊 Real Example: The Gap Calculation
4 Ways to Cover the Gap:
1. Cash 💵
If you have $150K in savings, you can pay the gap in cash. No additional loan needed.
Best for: High-net-worth buyers
2. Second Mortgage 🏦
Get a HELOC or home equity loan for the gap. Yes, the rate will be higher, but blended rate is still lower than 7%.
Best for: Most buyers
3. Seller Financing 🤝
Negotiate with the seller to finance the gap themselves. They become your second lender.
Best for: Motivated sellers
4. Assumption + New Loan Combo 🔄
Some lenders offer "assumption gap" loans specifically designed for this situation.
Best for: Buyers with good credit
💡 The Blended Rate Math
Even if you get a second loan at 9% for the gap, your blended rate is still way better than 7%:
• $350K @ 3% + $150K @ 9% = Blended rate of ~4.8%
• Still saves you $400+/month vs a new 7% loan!
Where to Find Homes with Assumable Mortgages
🏠 Roam (withroam.com)
The largest marketplace for assumable mortgages. Lists thousands of homes with FHA and VA loans. Shows the rate, balance, and monthly payment.
Best for: Browsing available properties
📋 AssumeList (assumelist.com)
Another dedicated platform for assumable mortgage listings. Good filtering options by rate and location.
Best for: Specific rate targeting
🔍 Your Real Estate Agent
Ask your agent to filter MLS listings for FHA, VA, or USDA properties. Not all will advertise as assumable, but they are.
Best for: Off-market opportunities
📱 Zillow/Redfin Filters
Filter by "FHA" or "VA" in the search. These properties have assumable loans by default.
Best for: Quick searches
🎯 Can't Find an Assumable? Compare Today's Best Rates
Assumable mortgages are competitive. If you can't find one, at least get the best rate available today.
Compare Rates from 300+ Lenders →VA Loan Assumptions: The Best-Kept Secret
🎖️ You Don't Need to Be a Veteran!
Here's what most people don't know: ANYONE can assume a VA loan. You don't need military service. You just need to qualify financially with the lender.
VA Assumption Requirements:
- ✅ Credit score: Typically 620+
- ✅ DTI: Usually under 41%
- ✅ Stable income verification
- ✅ 0.5% funding fee (of loan balance)
- ✅ Lender approval required
Important VA Consideration:
If a non-veteran assumes a VA loan, the original veteran's VA entitlement stays tied to that loan until it's paid off. This means the veteran can't use their full entitlement for another VA loan.
💡 Tip: Some veterans will only sell to other veterans who can substitute their entitlement.
Pros and Cons of Assumable Mortgages
✅ Pros
- Massive rate savings: Lock in 3-4% instead of 7%
- Lower closing costs: $500-$1,000 vs $10,000+
- Faster process: Often 30-45 days
- No appraisal required: In most cases
- Seller motivation: They want to sell their low rate
❌ Cons
- Large gap to cover: May need $50K-$200K+ cash or second loan
- Limited inventory: Not many sellers know about this
- Lender approval required: You still need to qualify
- Longer timeline: Some lenders are slow on assumptions
- Competition: Other buyers want these deals too
Frequently Asked Questions
What is an assumable mortgage?
An assumable mortgage lets you take over the seller's existing loan with its original interest rate and terms. FHA, VA, and USDA loans are assumable. If a seller has a 3% rate from 2021, you can assume that loan instead of getting a new 7% mortgage.
Can anyone assume a VA loan?
Yes! You do NOT need to be a veteran to assume a VA loan. Anyone who qualifies financially can assume a VA mortgage. However, if a non-veteran assumes the loan, the original veteran's VA entitlement remains tied up until the loan is paid off.
How much can I save with an assumable mortgage?
On a $400,000 loan, assuming a 3% rate instead of getting a new 7% rate saves approximately $800-$1,000 per month, or $288,000-$360,000 over 30 years. This is one of the biggest money-saving opportunities in real estate right now.
Are conventional loans assumable?
No, conventional loans are generally NOT assumable. They have "due-on-sale" clauses that require the loan to be paid off when the property is sold. Only government-backed loans (FHA, VA, USDA) are assumable.
🏠 Ready to Start Your Search?
Whether you find an assumable mortgage or need a new loan, make sure you're getting the best rate possible.
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Sarah Mitchell
VA/FHA Loan Specialist • 12+ Years Experience
Sarah specializes in government-backed loans and has helped hundreds of buyers navigate the assumption process.