Assumable Mortgage Savings Calculator

How to Use the Assumable Mortgage Calculator

Our calculator is designed to be straightforward and user-friendly. Here's how to get the most accurate savings estimate:

Step 1: Enter Home Details

Start by entering the home's purchase price. This is the total amount you're paying for the property. For example, if you're looking at a $400,000 home, enter 400000.

Step 2: Enter Assumable Loan Information

You'll need to know the assumable loan balance (how much is still owed on the existing mortgage) and the interest rate on that loan. This information is typically available from the listing agent or seller. Most assumable mortgages have rates between 2% and 4%, which are significantly lower than current market rates.

Also enter the remaining loan term. For example, if the seller got a 30-year mortgage 3 years ago, enter 27 years as the remaining term.

Step 3: Enter Current Market Rate

This is the interest rate you would get if you applied for a new mortgage today. Current market rates vary but are typically in the 6-7% range as of 2025. You can check current rates with any lender or mortgage broker. This rate is used to calculate what your monthly payment would be with a new mortgage for comparison.

Step 4: Enter Your Down Payment

Enter the amount of cash you plan to put down. When assuming a mortgage, your down payment covers the "equity gap" - the difference between the home price and the assumable loan balance. For example, if a home costs $400,000 and the assumable loan balance is $300,000, you'd need $100,000 plus closing costs to cover the equity gap.

Step 5: Optional Second Mortgage Rate

If the home has appreciated significantly and there's a large equity gap, you may need a second mortgage to cover the difference. Enter the interest rate for this second mortgage if applicable. The calculator will factor this into your total monthly payment calculation.

Understanding Your Calculator Results

Once you've entered all the information, the calculator will display several key metrics that help you understand the financial impact of assuming a mortgage versus getting a new loan.

Monthly Payment Comparison

You'll see your monthly payment if you assume the existing mortgage versus your monthly payment with a new mortgage at current market rates. This is often the most impactful number for buyers, as it shows your immediate cash flow savings. For example, assuming a 3% mortgage on a $400,000 home might result in a $1,200 monthly payment, while a new 7% mortgage could be $2,400 per month - a savings of $1,200 every month.

Monthly Savings

This is the difference between your assumable mortgage payment and your new mortgage payment. This money stays in your pocket each month and can be used for other expenses, savings, investments, or improving your quality of life.

Annual Savings

Your monthly savings multiplied by 12. This gives you a clear picture of your yearly financial benefit. For example, saving $1,200 per month equals $14,400 per year in savings. That's substantial money that can be redirected toward other financial goals.

30-Year Total Savings

This shows your total savings over the life of the loan, assuming you hold the mortgage for the full 30 years. This number can be staggering - often $200,000 to $500,000 or more in total savings. However, it's important to remember that many homeowners refinance or sell before the full term, so this is a maximum potential savings figure.

Real-World Example: Las Vegas Home Purchase

Let's walk through a realistic example of how assumable mortgages work in the Las Vegas real estate market:

Scenario: $450,000 Home in Henderson

Imagine you're looking at a beautiful home in Henderson, Nevada, listed at $450,000. The seller has a VA assumable mortgage with a remaining balance of $320,000 at 2.75% interest rate, with 27 years remaining on the loan. Current market rates are 6.8% for a new 30-year mortgage.

The Math

• Equity Gap: $450,000 (home price) - $320,000 (loan balance) = $130,000
• Your Down Payment: $130,000 (to cover equity gap)
• Assumable Monthly Payment: Approximately $1,350 at 2.75%
• New Mortgage Payment: Approximately $2,800 at 6.8% (on $450,000)
• Monthly Savings: $2,800 - $1,350 = $1,450 per month
• Annual Savings: $1,450 × 12 = $17,400 per year
• 30-Year Savings: Over $520,000 in total savings

In this example, you'd save $1,450 every single month by assuming the existing mortgage. Over just one year, that's $17,400 saved. Over the life of the loan, that's more than half a million dollars in savings compared to getting a new mortgage at current rates.

What This Means for You

These savings can be life-changing. With an extra $1,450 per month, you could pay off other debt faster, invest for retirement, save for your children's education, take family vacations, or simply have more financial breathing room. The calculator helps you see these numbers for any home you're considering.

Common Questions About Assumable Mortgage Calculations

What if the Home Has Appreciated Significantly?

If a home has appreciated, creating a large equity gap, you have two options: pay the difference in cash or use a second mortgage to cover the gap. Our calculator allows you to factor in a second mortgage rate to see your total monthly payment. While a second mortgage will increase your monthly payment, you'll still save significantly compared to a new mortgage at current rates.

Do Assumption Fees Affect the Calculation?

Assumption fees are relatively small one-time costs (FHA: $900 cap, VA: 0.5% of loan balance) and don't significantly impact your monthly payment calculations. However, these fees are much lower than closing costs on a new mortgage, which can be 2-5% of the loan amount. The calculator focuses on monthly payment comparisons, where assumption fees don't directly factor in.

What About Mortgage Insurance?

For FHA loans, mortgage insurance continues with the assumption. For VA loans, there's no PMI. Our calculator focuses on principal and interest payments. Mortgage insurance costs are typically a small percentage and don't significantly change the overall savings picture shown by the calculator.

How Accurate Are These Calculations?

Our calculator uses standard mortgage payment formulas to provide accurate estimates. The actual monthly payment may vary slightly based on property taxes, homeowners insurance, and mortgage insurance, but the principal and interest calculations are precise. These numbers give you a reliable estimate of your savings potential.