What is a loan assumption?

A loan assumption is when a qualified buyer takes over the seller’s existing mortgage, including the interest rate, balance, and terms.

What types of loans can be assumed?

FHA, and VA loans are typically assumable. Conventional loans are usually not assumable unless specified by the lender.

Why would someone want to assume a loan?

To take advantage of a lower interest rate, avoid closing costs associated with a new mortgage, or simplify the buying process.

How do I start the loan assumption process?

Contact us to schedule an initial feasibility assessment. We’ll determine if the loan is assumable and outline the next steps.

What makes your company different from a mortgage broker?

We specialize exclusively in loan assumptions and handle the entire process — from feasibility, paperwork, lender communication, to escrow coordination — maximizing your approval chances. Lenders are often slow and unresponsive; we are the liaison between buyer and lender and have the knowledge and experience to get the process completed in a timely manner.

How do I know if I qualify to assume a loan?

Buyers must meet the lender’s credit, income, and debt-to-income requirements. We guide you through the qualification process. But you can qualify for higher sale price with the lower rate assumed loan.

What costs are involved in assuming a loan?

Costs can include an assumption fee, credit report fee, escrow/title fees, and any required down payment or equity contribution.

Will assuming a loan affect my credit score?

Yes, the new loan will appear on your credit report. Timely payments can help build credit, but late payments can negatively impact it.

How long does the assumption process take?

Typically 30–40 days, depending on the lender and the complexity of the file.

Do I get a lower interest rate by assuming a loan?

You take over the seller’s existing rate, which may be lower than current market rates.

Is a down payment required?

If there’s a difference between the home value and remaining loan balance (i.e., the seller’s equity), the buyer needs to pay the seller. You can use savings, 401K funds/loan or new 2 nd mortgage or line of credit for the down payment required. Seller financed carrybacks also allowed.

FHA assumptions - No minimum equity required if buyer meets standard credit score (≥580) and debt ratio guidelines. If buyer credit score is below 580, FHA requires 10% equity in the property.

VA Loan - No equity requirement in most cases.

Do I need an attorney or title company?

Yes. Escrow and title are required to record the assumption and transfer property ownership properly.

What documents are required for the assumption?

Credit report, income verification, mortgage statement, loan documents, and any VA/FHA/USDA-specific forms.

Why should a seller offer their mortgage for assumption?

Attracts more buyers: Offering a lower, locked-in rate can make a home more attractive to a wider pool of buyers in a high-interest-rate environment.

Higher sale price: A seller may be able to negotiate a higher sale price because the buyer saves money on interest over the life of the loan.

Reduced closing costs: The overall closing costs associated with a loan assumption are often lower than those for a new mortgage. 

Do I need to pay off my mortgage before selling?

Not if the buyer assumes your loan and the lender approves the assumption – you must be current on a VA guaranteed loan at the time of assumption. Sellers should always request a release of liability from the lender.

Is seller Released of Liability: Yes, Sellers should always request a release of liability from the lender once assumption is approved and recorded.

What role does the real estate agent play?

The agent still manages the purchase and sale process, but works alongside the escrow/title company and the lender to ensure assumption approval. The purchase contract should clearly state the loan assumption terms.

Is a purchase and sale agreement required?

Yes. Just like a standard transaction, the assumption requires a purchase and sale contract between buyer and seller outlining price, loan assumption details, and contingencies.

How long does the loan assumption process take?

On average, 30–4o days. This timeline depends on the lender’s review of the buyer’s credit, income, and eligibility.

What are the costs involved?

Recording fees, Escrow, title fees

Lender assumption fees, credit report fee

Potential processing/consulting fees (if using a loan assumption specialist) and any required down payment or equity contribution.

What is the VA funding fee for loan assumptions?

The VA charges a 0.5% funding fee on the remaining loan balance for loan assumptions. This is significantly lower than the funding fee for new VA loans, which can go up to 3.6% for subsequent uses.

Are all VA loans assumable?

No, not all VA loans are assumable. You need to verify if the loan is eligible for assumption by reviewing the original loan documents or checking with the lender.

How does VA entitlement work in a loan assumption?

When a veteran sells a home with a VA loan, their entitlement remains tied to the property unless the buyer is another veteran who substitutes their entitlement.

Can you assume a VA loan without being a veteran?

Yes, non-veterans can assume a VA loan, as long as they meet the lender’s credit and income qualifications.

Benefits of Assuming VA loan

Lower Interest Rates: Buyers can lock in the seller’s interest rate, which can be significantly lower than current market rates.

No Private Mortgage Insurance (PMI): Assumable VA loans typically don’t require PMI, saving the buyer additional costs.

Reduced Closing Costs: Since the buyer is taking over an existing loan, they’ll often pay lower closing costs compared to securing a new loan.

New Conventional Mortgage Assumable FHA Mortgage

Sale Price $1,000,000,000 $1,000,000,000

Interest Rate 6.50% 3.50%

Loan Amount $800,000 $800,000

Monthly Principal & Interest $5,056.54 $3,592.36

Taxes & Insurance Varies by property Varies by property

Down Payment $200,000 (20% down) $200,000 (20% down)

Remaining Term 360 months (30 years) 300 months (25 years)

Total Payments $1,820,354.40 $1,077,708.00

Savings $742,646.40

** This is just an example, each assumable loan is different. Talk to our team about possibilities.

** Interest rate, monthly principal & interest all vary based on original loan terms.

Step 1: Contact DJ Reed, Realtor, to find you a home where you can assume the loan.

Step 2: Find more info at AssumptionPros.net for expert guidance in this process from a mortgage broker/loan officer of over 30 years, to see if this works for you, and if it does, guide you through.