Remember when mortgages were at 3% or lower? In some instances, homebuyers can still get them — by taking over another homeowner's mortgage through an assumable mortgage.
An assumable mortgage is a loan transferred directly to a new homeowner. Several components of the mortgage remain the same — the interest rate, monthly payment, private mortgage insurance and the term. The amounts paid for property taxes and homeowner's insurance may change because the bank does not set them.
To assume a loan, a buyer will have to qualify with the lender to "take the place" of the original buyer, said Ryan Dossey, co-founder of SoldFast, a Los Angeles-based real estate business.
"They'll want to run your credit, verify your income, review your debt-to-income ratio, and confirm your employment," he said.
The prospect of obtaining a 2020-era rate is spurring interest in assumable mortgages, even though they're challenging to get.
Buyers pay the difference between the amount owed on the mortgage and the sales price. The seller’s mortgage lender must approve the buyer. Let Homes.com show you what you need to know if you're considering one.
Homebuyers must balance pros and cons
There are several advantages and disadvantages to assumable mortgages, according to Kimber White, president of the National Association of Mortgage Brokers.
"While assumable mortgages can offer substantial savings in today's high-rate environment, they work best for buyers who have significant cash reserves or can qualify for secondary financing to cover the equity gap," she said. The equity gap refers to the amount the buyer pays for the existing equity in the house.
Assumable mortgages help sellers attract more buyers and sometimes sell for a higher price, she said. Buyers can get a below-average mortgage rate, she said.
For example, consider assuming a $500,000 mortgage with a 2.5% interest rate with a typical 30-year mortgage, said Mercedes Diego, a real estate attorney and partner with Cohn Lifland, Pearlman, Herrmann & Knopf LLP in Saddle Brook, New Jersey. The monthly principal and interest payment would total $1,911.23.
"If you would obtain the same mortgage with an interest rate of 6.5% (which is the average mortgage interest rate as of October 14, 2025), the principal and interest monthly payment would be $2,879 plus escrows," she said in an email. "If you consider the monthly savings of $967.77 multiplied by 120 months, the savings total $116,132.40."
But many servicers and lenders don't allow assumption of mortgages, White said. They take longer to be approved than other mortgages. Servicers that do allow assumable mortgages charge assumption fees from $1,000 to $3,000, White said.
Another downside is that buyers must come up with cash for the gap between the assumption of the mortgage and the sales price, she said.
"This is almost always a prohibitive barrier," White said. Lenders will not loan the amount because it would mean they would take a subordinate position to the mortgage, she said.
Only certain loans are assumable
Government-issued loans — such as those by the Federal Housing Administration, the Veterans Administration, and the United States Department of Agriculture — allow assumable mortgages. However, buyers who are not veterans may face stricter qualifications when assuming a VA loan. Conventional loans generally cannot be assumed; they often have due-on-sale clauses.
A real estate agent or lender can help homebuyers find assumable mortgages, said Michael Gaines, senior vice president of capital markets at Cardinal Financial in Detroit. Many agents highlight them in listings, he said.
Buyers also can search for "assumable loan" or "FHA/VA assumption" in online listings, he said. If you see a property, contact a lender to make sure the existing mortgage can be assumed, he said.
Assumable mortgages are growing in popularity
The Federal Housing Administration, an agency within the U.S. Department of Housing and Urban Development that underwrites home loans, issued 5,861 assumable mortgages in 2024, up 127% from 2,578 in 2022.
Assumable mortgages carry risks and they're not always available. But the payoff of lower rates may be a great fit for some buyers.
This mortgage workaround opens door to homeownership for some buyers priced out of market