How Assumable Mortgages Work
A step-by-step guide to assuming an existing mortgage and saving thousands
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Understand Assumable Mortgages
Learn which loans qualify (FHA, VA, USDA) and why they exist. These government-backed loans have assumable features that allow buyers to take over the seller's existing mortgage terms, including the interest rate.
- •FHA, VA, and USDA loans are assumable
- •Conventional loans typically are not assumable
- •Rates are locked at the original loan terms
Search for Assumable Homes
Find homes with assumable mortgages through MLS listings, partner platforms, or work with a specialized agent. Look for keywords like "assumable", "FHA loan", "VA loan" in listing descriptions.
- •Search MLS for assumable loan types
- •Use partner platforms (Assumable.io, Roam, AssumeList)
- •Work with an agent specializing in assumable mortgages
Evaluate the Deal
Compare the assumed rate vs. current market rates. Calculate the equity gap and down payment needed. Consider second mortgage options if the home has appreciated significantly.
- •Compare assumed rate (2-4%) vs. market rate (6-7%+)
- •Calculate equity gap: Home Price - Loan Balance - Down Payment
- •Consider second mortgage to cover equity gap
Get Pre-Qualified
Meet the lender's credit and income requirements. Typically need credit score 580-640+ and DTI under 50%. Gather standard documentation (W-2s, tax returns, bank statements).
- •Credit score: 580-640+ depending on loan type
- •DTI under 50% for FHA
- •Standard documentation required
Submit Assumption Application
Work with the existing loan servicer to process the assumption. Timeline is typically 45-90 days. Pay assumption fees (FHA: ~$900 cap, VA: 0.5% funding fee).
- •Process takes 45-90 days
- •FHA assumption fee: capped at $900
- •VA assumption fee: 0.5% (waived for disabled vets)
Close and Save
Complete the assumption, transfer the loan, and release the seller's liability. Start enjoying your lower monthly payments - saving $500-$1,500/month compared to a new mortgage.
- •Loan transfers to your name
- •Seller released from liability
- •Start saving immediately with lower payments
Key Benefits of Assuming an Existing Mortgage
Assuming an existing mortgage offers numerous advantages over getting a new loan, especially in today's high-interest-rate environment. Here are the primary benefits that make assumable mortgages an attractive option for homebuyers:
Massive Monthly Savings
The primary benefit is immediate monthly savings. Assuming a 2-4% mortgage instead of getting a new loan at 6-7%+ can save you $500-$1,500 per month. This is real, recurring savings that adds up significantly over time.
Lower Interest Rates Locked In
When you assume a mortgage, you lock in the seller's original interest rate. With rates currently at 6-7%+ for new mortgages, assuming a 2.5% or 3% loan provides immediate value that compounds over years.
Reduced Closing Costs
Closing costs for assumptions are typically lower than new mortgages. You won't pay origination fees, points, or other lender fees. Assumption fees (FHA: $900 cap, VA: 0.5%) are much lower than new mortgage closing costs.
Usually No Appraisal Required
Most assumable mortgages don't require an appraisal, saving time and money. This speeds up the process and reduces costs. Appraisals are only required in certain circumstances, such as significant home appreciation.
Side-by-Side: Assumable Mortgage vs. New Mortgage
| Factor | Assumable Mortgage | New Mortgage |
|---|---|---|
| Interest Rate | 2-4% (locked) | 6-7%+ (current) |
| Closing Costs | Lower | Higher |
| Appraisal | Usually not required | Required |
| Processing Time | 45-90 days | 30-45 days |
| Monthly Savings | $500-$1,500+ per month | Baseline (no savings) |
Important Considerations When Assuming a Mortgage
While assumable mortgages offer significant benefits, it's important to understand the considerations and potential challenges:
Equity Gap Considerations
If a home has appreciated significantly since the original mortgage was taken out, there will be an equity gap between the home's current price and the assumable loan balance. This gap must be covered with cash or a second mortgage. For example, if a home is worth $500,000 but the assumable loan balance is only $300,000, you'll need $200,000 (plus closing costs) to cover the equity gap.
Longer Processing Timeline
Assumptions typically take 45-90 days compared to 30-45 days for traditional mortgages. This is because the existing lender needs to verify your qualifications, and the process may involve additional approvals (especially for VA and USDA loans). Plan accordingly and set realistic expectations for your timeline.
Qualification Requirements
You must still qualify with the existing lender, meeting their credit score, income, and DTI requirements. While these are often similar to or slightly less strict than new mortgage requirements, you still need to provide documentation and meet their standards. Work with an experienced agent to ensure you're well-prepared for the qualification process.
Loan Type Limitations
Only FHA, VA, and USDA loans are assumable. Conventional loans are typically not assumable. This means your options are limited to homes with these specific loan types. However, there are over 12 million assumable mortgages nationwide, so there are plenty of opportunities available.
Getting Started with Assumable Mortgages in Las Vegas
Ready to explore assumable mortgage opportunities? Here's how to get started:
Step 1: Understand Your Financial Situation
Review your credit score, calculate your debt-to-income ratio, and determine how much cash you have available for a down payment or equity gap. Most assumable mortgages require credit scores of 580-640+ and DTI ratios under 41-50%, depending on the loan type.
Step 2: Work with a Specialized Agent
Partner with an agent who understands assumable mortgages. They can help you identify opportunities, navigate the process, and avoid common pitfalls. Dr. Jan Duffy specializes in assumable mortgages and has the expertise to guide you successfully.
Step 3: Start Your Search
Use MLS searches, partner platforms, or work directly with your agent to find homes with assumable FHA, VA, or USDA mortgages. Be proactive in asking listing agents about assumable loans, as this information isn't always prominently featured.
Step 4: Evaluate Opportunities
When you find a home with an assumable mortgage, calculate the equity gap, estimate your monthly payment savings, and determine if the opportunity makes financial sense. Our calculator on the calculator page can help with these calculations.
Schedule a Consultation
Book a time to discuss assumable mortgage opportunities with Dr. Jan Duffy