Assumable mortgage
A mortgage a buyer can take over from the seller at the seller's existing rate and terms. FHA, VA, and USDA loans are often assumable. Most conventional loans aren't.
Every term like this one lights up in the step you're on.
Free to set up. No credit card.Part 1 of 4
Why a seller cares
If your loan is FHA, VA or USDA and its rate is well under today's, a buyer may be able to take it over. That can make your home worth more to the right buyer, and it takes the lender's approval and time.
Part 2 of 4
A simple example
Your FHA loan has a $220,000 balance at 3.1%. Rates are at 6.5%. A buyer who assumes it saves several hundred dollars a month.
| The situation | What follows |
|---|---|
| The buyer qualifies with your lender to assume the loan | They take the $220,000 at 3.1% and pay you the rest of the price in cash or a second loan |
| The buyer cannot cover the gap between the balance and the price | The assumption is not much use; most buyers cannot bring $80,000 |
| Your loan is conventional | Almost never assumable; the due-on-sale clause applies |
A low-rate government loan is a feature of the house. Whether it helps depends on the buyer's cash.
Part 3 of 4
What people get wrong
That any low-rate mortgage can be handed to the buyer. Conventional loans almost never can, and even assumable ones take the lender's sign-off.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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