Some mortgages are assumable—most often FHA, VA, and USDA loans—when the buyer qualifies and the servicer approves the transfer.
If you’re staring at today’s rates and wondering whether you can take over someone else’s lower rate, an assumption can be the answer. It lets a buyer step into the seller’s existing loan terms instead of taking out a brand-new mortgage. The upside can be real interest savings. The trade-off is extra paperwork, tighter timelines, and a cash gap that can surprise first-time assumption buyers.
Bring a calculator, patience, and a copy of the seller’s loan statement. Those three things save you from most assumption headaches.
Are Any Mortgages Assumable?
Yes—some are. In the U.S., the loans that most often allow assumption are government-backed programs: FHA, VA, and USDA. Many conventional loans written in recent years are not assumable because the note includes a due-on-sale clause that requires full payoff when ownership transfers. A lender can still allow assumption on certain conventional or portfolio loans, yet it’s the exception, not the default.
| Loan Type | Assumption Often Allowed? | What Usually Must Happen |
|---|---|---|
| FHA forward mortgage | Yes | Buyer qualifies; servicer approves; assumption agreement signed |
| VA guaranteed loan | Yes | Buyer credit approval; lender or VA approval; liability release handled |
| USDA Rural Development 502/guaranteed | Often | Buyer meets program eligibility and credit; agency or lender approval |
| Conventional conforming | Rare | Note must allow it; lender must agree in writing |
| Jumbo loan | Rare | Case-by-case; many notes require payoff at sale |
| Portfolio loan | Sometimes | Bank policy controls; buyer underwriting; closing docs updated |
| Adjustable-rate mortgage (ARM) | Depends | Assumability depends on note; rate still adjusts on schedule |
| Seller financing / contract-for-deed | By contract | Terms set by seller; state law controls title transfer details |
Assumable Mortgages By Program And Lender Rules
“Assumable” is not a listing adjective. It’s a clause, a program rule, and a servicer process. Start with the loan type, then confirm the paperwork tied to that exact loan number.
FHA loans
FHA-insured single-family forward mortgages are generally assumable with lender approval. HUD’s FHA FAQ states that FHA-insured forward mortgages are assumable and limits extra legal restrictions that would block a permitted transfer. HUD FHA assumable mortgage FAQ.
In a real transaction, the buyer still applies. The servicer reviews credit, income, debts, occupancy plans, and the loan’s payment history. If approved, the buyer takes over the remaining balance, rate, and remaining term.
VA loans
VA loans can be assumed when the buyer meets the lender’s credit standards and the lender or VA approves the assumption. VA’s borrower information says that for many VA loans committed on or after March 1, 1988, a buyer may assume the loan if the loan holder or VA approves the purchaser’s creditworthiness. VA borrower rights on loan assumability.
Two items matter for sellers: a written release of liability, and whether the seller’s VA entitlement stays tied to the loan. If the assumption does not include a substitution of entitlement by an eligible veteran, the seller’s entitlement can remain encumbered until payoff. Get the servicer’s written explanation before you sign a contract.
USDA loans
USDA Rural Development and USDA-guaranteed loans can be assumable under certain program paths. Many deals require that the loan is current and that the buyer meets eligibility rules tied to property location and income. The approval path can involve the lender and, in some cases, the agency. Ask the servicer for the assumption checklist that applies to the specific loan.
Conventional, jumbo, and portfolio loans
Most modern conventional and jumbo loans are built around due-on-sale language. That clause is why so many sellers can’t “transfer” their low rate even if they want to. Portfolio loans and older notes are where you’ll see exceptions. The only reliable answer is in writing: the promissory note, plus the servicer’s policy on assumptions.
What An Assumption Changes In Your Deal Math
An assumption does not rewrite the loan. You inherit it, warts and all. That has three effects that shape the whole transaction.
The rate and term stay the same
You keep the seller’s interest rate, amortization schedule, and remaining term. You also keep features you may not love, like FHA mortgage insurance or an ARM’s later rate adjustments.
You take over the balance, not the sales price
The assumption transfers the current loan balance. The purchase price is separate. If the home sells for $450,000 and the assumable balance is $310,000, you still must cover the $140,000 gap plus closing costs. Many assumption deals succeed or fail on how that gap gets covered.
Paperwork decides who is liable
Buyers want clean title and clear payment instructions. Sellers want proof they’re released from liability when the buyer takes over. If the lender won’t issue a release, the seller can remain responsible even after the home is sold.
When An Assumable Mortgage Is Worth Chasing
Assumptions shine in a narrow lane. If you fit that lane, it can be a strong move.
- Large rate gap: The bigger the gap between the assumed rate and current rates, the more savings you can bank over time.
- Gap plan is realistic: Cash, a second loan, or seller concessions can cover the price-to-balance gap without breaking your budget.
- Timeline can flex: Servicer underwriting can take longer than a standard purchase with a local lender.
- You plan to hold the home: Longer ownership gives the lower rate time to pay you back.
Step-By-Step: How To Assume A Mortgage
Use this workflow to keep the deal moving and to avoid last-minute surprises.
1) Confirm assumability in writing
Before you negotiate hard on price, get the servicer’s assumption packet or a written confirmation that the servicer accepts assumption applications for that loan. Do not rely on a listing description or a verbal “yes.”
2) Gather the numbers you need
Request the unpaid principal balance, interest rate, payment amount, escrow details, and whether the loan is current. A delinquent loan can stop an assumption request.
3) Build the gap plan
Calculate: purchase price minus assumable loan balance equals your gap. Then add closing costs. If you’ll use a second loan, talk with that lender early so your approvals line up with the assumption timeline.
4) Apply with the servicer
The servicer collects income, assets, credit, and occupancy documentation. Expect something that feels like a standard mortgage application, with fewer choices since you’re taking the existing terms.
5) Close and store the proof
At closing, confirm what the lender issues. Sellers should keep the liability release letter and any VA entitlement paperwork. Buyers should keep the assumption agreement, the new payment instructions, and the recorded deed.
Costs, Timing, And Paperwork You Should Expect
Assumptions are often pitched as cheap and quick. Some are. Others drag. These are the items that tend to show up across programs.
| Item | Who Often Pays | What To Watch |
|---|---|---|
| Assumption processing fee | Buyer | Get the fee schedule in the packet; confirm when it’s due |
| Credit report and underwriting | Buyer | Approval can take weeks; ask for typical turn times |
| Title work and title insurance | Buyer (varies by market) | Clear liens early; title rules match a normal sale |
| Appraisal | Buyer | Some servicers require it; second loans often require it too |
| Gap financing | Buyer | Second liens have their own rules; confirm the first lien allows it |
| Escrow setup and prepaid items | Buyer | Taxes and insurance may be collected up front |
| Seller liability release paperwork | Seller | Get it in writing and store it with closing records |
| Contract timeline buffer | Both | Write deadlines around servicer approval, not a fixed date |
Red Flags To Spot Before You Spend Money
Assumption deals fail for predictable reasons. Check these early.
The seller won’t authorize the servicer to share facts
Servicers often won’t confirm balance or assumability to a buyer without the seller’s written authorization. If the seller won’t sign it, you’re guessing on the core numbers.
The gap is bigger than the buyer’s plan
A low-rate assumption is only half the puzzle. If you can’t cover the gap, the deal can collapse after inspection and appraisal costs are already spent.
The seller can’t get released from liability
Some sellers assume an assumption automatically removes them from the loan. That is not always true. If a release of liability is required, make it a written closing condition.
Simple Ways To Estimate The Value
Do two quick checks before you chase an assumption for weeks.
Monthly savings check
Estimate the payment on a new loan for the same assumed balance. Subtract the assumed payment. Multiply the monthly savings by the number of months you expect to keep the loan. That gives you a rough ceiling on what the lower rate can save.
Cash gap trade-off check
Now weigh the cash you must bring to cover the price-to-balance gap. If you tie up a large lump sum, that money is not available for repairs, reserves, or other goals. If the rate savings don’t justify the cash commitment, a standard new loan may fit better.
Closing Notes That Keep You Safe
So, are any mortgages assumable? Yes, in many cases with FHA, VA, and USDA loans, and sometimes with certain portfolio or older conventional loans when the note allows it. The win is the seller’s rate. The catch is the gap cash and the servicer’s timeline. Verify the loan type, get the packet, and run the gap math before you get attached to the house.
One more time, are any mortgages assumable? Some are, and the proof lives in the loan documents and the servicer’s written steps. Treat it like a normal purchase plus extra lender approval, and you’ll avoid the common traps.