A Second Chance at Low Rates? What to Know About Assumable Mortgages

What Is an Assumable Mortgage?

An assumable mortgage allows a buyer to take over the seller’s existing home loan—same interest rate, same balance, same terms.

Imagine inheriting a 2.5% mortgage in a world where 30-year loans hover around 7%. That could mean hundreds less per month, and tens of thousands saved over time.

But while the opportunity is real, the process is anything but simple. You need an experienced real estate broker to navigate the intricacies, to be your advocate, and to truly explain an honest timeline.

Not All Loans Are Created Equal

Only certain types of loans are typically eligible:

FHA loans: Backed by the Federal Housing Administration, these loans are designed for lower-income borrowers who may not qualify for conventional financing. The new borrower must still meet all FHA requirements, including credit and employment standards.
VA loans: Available to active-duty service members and veterans, VA loans can even be assumed by nonveterans, though certain conditions still apply.
USDA loans: Offered or guaranteed by the U.S. Department of Agriculture, these loans are intended for low- to moderate-income buyers in eligible rural areas. The buyer must meet USDA credit and income criteria to assume the loan.

These government-backed loans often include assumable language in the fine print. Most conventional loans include a “due-on-sale” clause, which typically blocks assumptions unless the lender makes an exception.

You can only assume the remaining balance – no changes to the amount, term, or interest rate.

At The Jacobs Co, we review the original loan terms, current balance, and lender requirements to help clients understand if an assumption is possible…and smart.

Hidden Hurdles (Where We Come In)

Assumable loans sound great, but they come with some common challenges:

You still need to qualify (credit, income, DTI).
You may need a large down payment to bridge the gap between the loan and the home’s value.
Processing times are slower – often 75-180+ days.
Servicers are often reluctant, since they earn less on assumptions (sometimes nothing at all!).
FHA and VA cap how much lenders can charge to process an assumption.

Despite the friction, deals are getting done, with expert guidance.

Who’s Actually Doing This?

In 2023, over 6,000 assumable mortgages closed – a 139% increase from the year before.

More buyers are seeking these low-rate loans, and companies like Roam are building platforms to surface them.

But platforms only go so far. Real success takes creativity. The platforms are claiming to be experts in the assumable loan industry, but the reality is that assumable loans haven’t been used that much since the 80s when rates were astronomical, so it’s new-ish to the so-called experts and you don’t actually need a specific platform to make an assumable loan work.

If you want the deal to close, you need a team that knows how to structure it.

That’s where we come in.

What About Loan Amount Limits?

There’s no cap on what you can assume, but there are baked-in limitations based on the original loan type:

FHA: subject to county-by-county loan limits
VA & USDA: amounts based on eligibility and appraised value
You’re assuming the current loan balance, not renegotiating it

A good lender will help you review the original terms, determine equity gaps, and strategize how to cover them: cash, second loans, or structure.

Is It Worth It?

If you’re planning to stay in a home long-term and want to lock in savings, an assumable loan could be a powerful move. But it takes insight, persistence, and smart math to make it happen.

That’s exactly what we bring to the table.

Let’s Talk Strategy

Whether you’re buying, selling, or just curious—we’ll run the numbers, dig into your loan options, and give you straight answers about whether an assumption is a fit.

Call or text Adam at The Jacobs Co today 720-394-0719
You bring the dream, we’ll bring the details.

The Experience You Need. The Advocates You Deserve.