Assumable mortgages: take over a seller's low rate

Many homes have FHA, VA or USDA loans from years when rates were much lower. Taking over (assuming) that loan can lower your payment a lot. Compare it with a new loan here.

These numbers are estimates only and may not be accurate. They depend on your real interest rate, credit, income and the home's actual taxes and insurance. Contact us for accurate figures; it's free and there's no obligation. The starting interest rate (6.5%) is an example only, not a quote: your rate depends on your credit, loan type, down payment and the market, and can be higher or lower. Change it to see the difference.

The home and the seller's loan

Purchase price ($)

Loan balance you take over ($)

Seller's interest rate (%)

Years left on that loan

Covering the gap

Cash you can put toward the gap ($)

Second loan rate (%) if needed

Second loan term

Assumption fee and costs ($) estimate

Compare with a new loan

Today's rate for a new loan (%) example

Monthly saving vs a new loan (P&I)

$—

Gap: price minus loan balance
Second loan needed
Assumed loan payment
Second loan payment
Total principal & interest
Blended rate
New loan payment instead
Cash needed (gap cash + fees)

Taxes, insurance and mortgage insurance come on top and are similar either way.

Estimates only. Contact us for accurate figures: free, no obligation.

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Which loans can be assumed?

FHA: generally assumable by a qualified buyer.
VA: assumable by veterans and non-veterans with lender approval; the seller's entitlement may stay with the loan.
USDA: generally assumable with approval.
Conventional: usually not assumable.

Selling a home with a low-rate FHA or VA loan?

Your low rate can be a selling point that makes your home stand out. We can check whether your loan is assumable and market it to buyers.

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What's next?

Compare with a new loanFull monthly cost at today's rates.Go →Find homes with assumable loansTell us what to watch for.Go →Get pre-approvedFind out exactly how much you can borrow. It's free, there's no obligation, and sellers take your offer more seriously.Go →

Assuming a loan vs taking over payments ("subject-to"): an overview

This is a general outline, not legal advice. Every situation is different. Speak to a real estate attorney before agreeing to take over anyone's loan, and talk to us about the numbers.

Formal assumption

You apply to the seller's lender and, if approved, the loan is legally transferred to you at the seller's rate and remaining term. The seller is usually released from the loan.

Only some loans allow it, mainly FHA, VA and USDA.
You must qualify on credit and income, much like a new loan.
It can take 45 to 90 days or more, and the lender charges an assumption fee.
With a VA loan, the seller's VA entitlement may stay tied up unless the buyer is a veteran who substitutes theirs.

"Subject-to" (taking over payments)

The buyer takes ownership and makes the payments, but the loan stays in the seller's name and the lender isn't asked to approve it.

Most mortgages have a "due-on-sale" clause: the lender can demand the full balance when the home is sold.
The seller's credit stays on the line if payments are missed.
Insurance, escrow and title need careful handling.
It carries real legal and financial risk for both sides, which is why we don't recommend it without an attorney.

The cash gap: the part people miss

When you take over a loan, you pay the seller the difference between the purchase price and the loan balance, usually in cash at closing. For example: price $400,000, remaining loan $250,000, so you'd need about $150,000, plus closing costs. Some buyers cover part of the gap with a second loan, if a lender allows it.

That's why assumptions work especially well if you're selling a home too: the money from your sale can cover the gap, and you keep the seller's lower rate. The calculator above shows your cash gap and your blended payment.

Ask Bill about an assumption

Common questions

What is an assumable mortgage?

A loan that a buyer can take over from the seller, keeping the seller's interest rate and remaining term. FHA, VA and USDA loans are generally assumable with lender approval; most conventional loans are not.

Why would I want to assume a loan?

If the seller has a much lower rate than today's, taking over their loan can mean a far lower payment than a new mortgage.

What's the catch?

You must cover the difference between the price and the loan balance, with cash or a second loan. You must qualify with the servicer, there may be an assumption fee, and assumptions can take longer to close. With a VA loan, the seller's entitlement may stay tied to the loan unless the buyer is an eligible veteran who substitutes theirs.

How do I find homes with assumable loans?

Ask us. Listings don't always mention it, but the loan type can often be checked, and some agents note it in the listing.

For education and planning only. Approximate estimates; not legal, tax or financial advice. Not a loan offer, approval or commitment to lend. Example rates are for illustration only; rates can change and may not be available at commitment or closing. Rates, terms, taxes, insurance and program rules vary and change; your actual numbers may differ. Mortgage services by Bill McElhill, NMLS #2176490, licensed in Florida, Georgia and Texas.

Your next step

Selling a home to cover the gap? →Your home's value Find homes →We can look for assumable loans