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Buying a home

Assumable mortgages: how to take over a low-rate FHA or VA loan

FHA and VA loans can be assumed by a qualified buyer, keeping the seller's low rate. How assumptions work, the costs, the down payment gap and the VA entitlement catch.

MortgageInfo.us Published 4 min read

The short answer

An assumable mortgage lets a buyer take over the seller's existing loan, including its interest rate and remaining balance. FHA and VA loans are assumable if the buyer qualifies with the loan's servicer; most conventional loans are not, because of due-on-sale clauses. With the 30-year average at 7.32% (Freddie Mac, week of October 22, 2026), assuming a loan made at 3% to 4% can cut the payment sharply, but the buyer must pay the seller's equity in cash or with a second loan.

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Key numbers

Assumable with approval
FHA, VA
Usually not assumable
Conventional (due-on-sale)
VA assumption fee
0.50% of the balance (38 U.S.C. 3729)
Big hurdle
Covering the seller's equity

Which mortgages are assumable?

Loan typeAssumable?Key rules
FHAYes, with credit approvalThe buyer must qualify with the servicer (HUD Handbook 4000.1); HUD caps the processing fee the lender can charge (raised to $900 by Mortgagee Letter 2016-24)
VAYes, with credit approvalLoan must be current; buyer must qualify as if they were a veteran; 0.50% funding fee unless exempt (38 U.S.C. 3714 and 3729). Buyers don't have to be veterans
ConventionalUsually noMost conventional mortgages have a due-on-sale clause

How an assumption works, step by step

  1. Find an assumable listing. Ask the listing agent for the loan type, rate and balance; some listings advertise it.
  2. Get approved by the seller's servicer (not a lender of your choice). They check credit, income and debts like a new loan.
  3. Cover the equity gap. If the price is $500,000 and the loan balance is $320,000, you need $180,000 in cash or a second mortgage, and a second loan's higher rate can erase much of the savings.
  4. Close and release the seller. The seller should get a written release of liability; on VA loans, 38 U.S.C. 3714 relieves the veteran of liability to VA when the assumption is approved.

Assumptions are processed by the servicer and can take longer than a new loan, so build extra time into the purchase contract.

The VA entitlement catch for sellers

When a VA loan is assumed, the seller's VA entitlement stays tied to the loan unless the buyer is an eligible veteran who substitutes their own entitlement (VA Form 26-8106). Until the loan is paid off, the seller may have less entitlement available for their next VA loan.

Is assuming a mortgage worth it?

Compare the blended cost: the assumed loan's payment plus the payment on any second loan for the equity, against a new loan at today's rate. A low-rate assumption pays off most when the equity gap is small or you have cash to cover it. Run both options in the payment calculator.

Frequently asked questions

What is an assumable mortgage?

A loan the buyer can take over from the seller, keeping the existing rate, balance and remaining term. The buyer must qualify with the seller's servicer.

Are FHA loans assumable?

Yes. FHA loans can be assumed by a buyer who passes the servicer's credit review. HUD caps the fee the lender can charge to process the assumption.

Can a non-veteran assume a VA loan?

Yes. Any buyer who qualifies on credit can assume a VA loan (38 U.S.C. 3714). The seller's VA entitlement stays with the loan unless an eligible veteran buyer substitutes their own.

How much does it cost to assume a mortgage?

Closing costs are usually lower than a new loan. VA charges a 0.50% funding fee on the balance unless the buyer is exempt, and FHA lenders charge a capped processing fee.

Are conventional loans assumable?

Usually not. Most conventional mortgages include a due-on-sale clause that requires the loan to be paid off when the home is sold.

How do you pay the seller's equity on an assumption?

With cash or a second mortgage. On a $500,000 home with a $320,000 balance, the buyer needs $180,000 plus closing costs.

Prepared by the MortgageInfo.us editorial team from primary sources. General education only, not financial, legal, or tax advice. How we research and fact-check.

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