Assumable Mortgage: How It Works and Which Loans Qualify

An assumable mortgage lets a home buyer take over the seller’s existing loan, with its interest rate, remaining balance and remaining term, once the loan servicer (and for some loans, the agency behind it) approves the buyer. FHA, VA and USDA loans can be assumed with that approval. Most conventional loans cannot, because they carry a due-on-sale clause. However, some conventional adjustable-rate mortgages (ARMs) can.

What is an assumable mortgage?

With an assumable mortgage, the buyer steps into the seller’s loan. The rate, the monthly principal and interest payment, the balance and the payoff date stay the same. The loan does not become a new loan. Instead, the existing note gets a new borrower.

You also do not buy a mortgage from the bank. You apply to take over the seller’s loan terms, and the servicer decides. So you cannot shop for an “assumable mortgage lender,” because only the seller’s current servicer can process it. VA, for example, lets only the holder or servicer of the existing loan close one (VA Pamphlet 26-7, Chapter 5, Topic 5).

For the seller, the big change is liability. FHA and VA assumptions release the seller once the buyer qualifies. However, the USDA rule keeps the seller personally liable.

Which loans are assumable?

So, are all mortgages assumable? No. Government-backed loans are, but only with approval. That also answers the claim that “all VA and FHA loans are assumable without restriction”: the buyer still has to qualify.

Are conventional loans assumable?

Usually not. Fannie Mae’s Selling Guide states that “conventional fixed-rate loans are not assumable as of the note date” (B2-1.4-01, published October 7, 2026). Similarly, Freddie Mac’s Guide (8406.1) tells servicers to call a loan due on sale when the note has a due-on-sale clause, unless an exception applies. That covers the typical 30-year fixed conventional loan.

Conventional ARMs are the exception. Fannie Mae’s Standard ARM Plan Matrix lists its 3/6 ARM as assumable for the full term. Its 5/6, 7/6 and 10/6 ARMs are due-on-sale during the fixed period and assumable after it (Texas 50(a)(6) versions stay due-on-sale). The buyer must still pass Fannie Mae’s underwriting.

After the fixed period, these rates adjust every six months, so the buyer takes on an adjustable-rate mortgage with no locked rate. Freddie Mac’s Guide does not say which of its ARMs are assumable, so check the note.

How to check whether your mortgage is assumable

Look at your note and your mortgage or deed of trust for a section on assumption or transfer of the property. Then ask your servicer whether the loan is assumable, what the fee is, and what a buyer must send.

How to assume a mortgage, step by step

1. Find the home and confirm the loan. Ask the seller or listing agent for the loan program, rate, balance and servicer.
2. Agree on the price and the equity payment. The difference between the price and the loan balance goes to the seller at closing.
3. Contact the servicer early. Ask for its application, fee and timeline. VA, for example, says the seller must apply for approval before the sale.
4. Apply and qualify. Expect to document income, assets and credit as for a new loan. FHA requires manual underwriting, while VA servicers apply VA’s credit standards.
5. Wait for the decision. VA servicers with automatic authority must decide within 30 calendar days of a complete package. For FHA and USDA loans, ask the servicer for its timeline in writing.
6. Close and record the transfer. The deed moves ownership to you, and you sign an assumption agreement. Recording fees may apply.
7. Confirm the seller’s release. FHA uses form HUD-92210.1, and VA treats an approved assumption as a release of liability. USDA keeps the seller liable.

The equity gap on an assumable mortgage

This is where searches for an “assumable mortgage with no down payment” hit a wall. You take over the loan balance, not the price, so you pay the seller the difference, usually at closing.

For illustration, say a home sells for $400,000 and the seller owes $250,000. The gap is $400,000 minus $250,000, or $150,000. That is far more than the down payment on a new loan for many buyers.

Strictly speaking, FHA does not require the assuming borrower to make a cash investment (HUD Handbook 4000.1, II.A.8.n.v(B)). So when a seller has little equity, the gap can be small.

Buyers usually close the gap with one or more of these:

• Cash savings. The simplest route.
• A second mortgage. The servicer and the second lender must both agree. Also, add its payment to your comparison, because its rate can erase the savings.
• A USDA supplemental loan. USDA may approve a supplemental guaranteed loan when more financing is needed (7 CFR 3555.256).
• Seller carryback. The seller lends part of the gap behind the existing loan, if the servicer allows that second lien. Compare seller financing versus a lender mortgage.

What an assumable mortgage costs

Each program sets its own fee rules, current as of October 2026.

FHA. The servicer may charge a “reasonable and customary” processing fee of up to $1,800, plus the actual cost of credit reports and employment verifications (HUD Handbook 4000.1, II.A.8.n.vi and III.A.3.b.iii, last revised August 12, 2026). If your credit is approved but the deal falls through for reasons outside your control, half the fee is refunded. In addition, HUD’s assumption review skips the appraisal steps. See the FHA loan guidelines for other rules.

VA. A servicer with VA automatic authority may charge up to $300 plus the actual cost of a credit report ($250 plus the report without automatic authority, or a lower state maximum). The buyer also pays a VA funding fee of 0.5% of the balance at transfer, unless exempt. On a $250,000 balance, that is $1,250, paid in cash because it cannot be added to the loan.

USDA. The rule sets no dollar cap on a processing fee. However, it requires a new guarantee fee based on the remaining principal balance. The buyer must also meet USDA loan eligibility rules, including income limits.

Also expect other closing costs, such as recording fees and the closing agent’s charges, and get a written estimate before you sign.

Is an assumable mortgage worth it? Pros and cons

An existing rate has value only if it is below what you could get today. Freddie Mac’s Primary Mortgage Market Survey put the average 30-year fixed rate at 7.11% on November 12, 2026, up from 6.24% a year earlier. Check current mortgage rates before you compare.

For illustration, take a $250,000 balance at 4.25% with 25 years left: principal and interest is about $1,354 a month. By contrast, a new 30-year $250,000 loan at 7.24% (the October 29, 2026 average) costs about $1,704. The difference is about $350 a month. Both figures exclude property taxes, homeowners insurance and mortgage insurance, and a real new-loan rate depends on your credit and lender.

For buyers

• Pro: a below-market rate, and a shorter remaining term on an older loan.
• Pro: FHA and VA cap the processing fee.
• Con: the cash gap can be large.
• Con: you cannot change the rate. Freddie Mac, for instance, bars a note rate change on a transfer outside a modification.
• Con: the seller may refuse or price the low rate into the sale.
• Con: a slow servicer makes the timeline less predictable.

For sellers

• Pro: a low rate can make your listing stand out.
• Pro: FHA and VA sellers are released from liability once the buyer qualifies.
• Con: a VA seller’s entitlement stays tied up unless a veteran buyer substitutes theirs. See VA entitlement codes and how many times you can use a VA loan.
• Con: a USDA seller stays personally liable.
• Con: an FHA partial claim becomes due when you no longer own the home.

To sell with an assumable mortgage, get your servicer’s assumption package before you list. Then have your agent put the loan type, rate and assumability in the listing. Commissions stay negotiable, and an agent can represent either side.

How to find assumable mortgages

There is no official national list of assumable mortgages. Instead, buyers find them through these routes:

• Listing remarks and filters. Search listing sites for “assumable” and use an assumable filter where one exists. Treat any tag as a lead until the servicer confirms it.
• Agents. A buyer’s agent can ask listing agents whether an FHA, VA or USDA loan is in place.
• Likely homes. Homes financed with FHA, VA or USDA loans when rates were below today’s are the best candidates.
• Assumable listing services. Private listing services exist. Still, none can approve an assumption, because only the servicer can.
• The seller’s statement. Before you offer, ask for a recent mortgage statement to confirm the rate, balance and servicer.

Assuming a mortgage from a family member or after a death

Federal law limits the due-on-sale clause for family transfers. Under the Garn-St Germain Act (12 U.S.C. 1701j-3(d)) and its rule (12 CFR 191.5(b)), a lender cannot call the loan due on a home the borrower occupies when:

• a relative receives the home after the borrower’s death;
• the borrower’s spouse or children become owners;
• a spouse becomes the owner through a divorce decree or separation agreement;
• a joint tenant dies; or
• the home goes into a living trust and the borrower stays the beneficiary and occupant.

For the relative, spouse, child and divorce transfers, the new owner must live there or plan to. Freddie Mac also permits transfers after 12 months to a parent, child, grandparent, grandchild or sibling who will live in the home.

Taking title is not the same as assuming the loan, though. You can keep paying, but the original borrower or their estate stays liable unless the servicer approves an assumption and a release. For an inherited FHA loan, the servicer may skip the credit review if the heir has made the payments for at least six months. Read more on buying a home from a family member.

Assumable mortgage FAQ

Are conventional loans assumable?

Most are not. Fannie Mae says conventional fixed-rate loans are not assumable, and conventional notes usually carry a due-on-sale clause. Some Fannie Mae ARMs are assumable, for the full term or after the fixed period.

Are Fannie Mae and Freddie Mac loans assumable?

Fannie Mae fixed-rate loans are not, but its standard 3/6, 5/6, 7/6 and 10/6 ARMs are, on the terms in its ARM plan matrix. Freddie Mac requires servicers to call a loan due on sale when the note has a due-on-sale clause. Both allow the family transfers that federal law protects.

Can anyone assume my mortgage?

Only a buyer the servicer approves. For an FHA loan closed on or after December 15, 1989, the buyer must also live in the home. A non-veteran can assume a VA loan, but your entitlement stays tied up unless a veteran buyer substitutes theirs.

Do you need good credit to assume a mortgage?

You need to meet the program’s credit standards. FHA requires a manual review by the servicer’s underwriter, and VA requires the buyer to be creditworthy under its rules. USDA also checks income eligibility.

Can I assume my parents’ mortgage?

Often, yes. Federal law bars the lender from calling the loan due when a child becomes an owner or a relative inherits the home, as long as you live there. However, to take over the debt and free your parents or their estate from liability, the servicer must approve an assumption.

Can you buy someone’s mortgage from the bank?

No. You take over the seller’s loan terms once the servicer approves you.

Next steps

If you are buying, ask for the loan type, rate, balance and servicer on any FHA, VA or USDA listing you like, then run the equity-gap math before you offer. If you are selling, request your servicer’s assumption package now, so a buyer knows the fee and timeline up front.