Assumable mortgages in 2025

Assumable mortgages have been around for decades, but they are gaining renewed attention in 2025 as interest rates remain high compared to loans from a few years ago. If you’re buying or selling a home, understanding how they work could give you a major advantage.

What Is an Assumable Mortgage?

An assumable mortgage allows a buyer to take over the seller’s existing loan—same interest rate, same remaining term, and same balance—rather than getting a brand-new mortgage.

Example: If the seller locked in a 3% rate in 2021, you could take over that rate today instead of paying a higher one.

Which Loans Are Assumable?

• FHA loans – Usually assumable with lender approval.

• VA loans – Assumable, but military benefits for the seller may be affected.

• USDA loans – Often assumable with approval.

• Conventional loans – Rarely assumable unless the note explicitly says so.

Always check the original loan agreement and confirm with the lender.

Buyer Benefits in 2025

• Lower monthly payments if the existing rate is below current market rates.

• Potential savings on closing costs.

• Faster closing process (in some cases) compared to securing a new mortgage.

Seller Benefits in 2025

• More buyer interest, especially when rates are high.

• Potential for a faster sale.

• Ability to market a property as having a “low-rate assumable loan.”

The Catch

• Down payment gap – Buyers must cover the difference between the purchase price and the remaining loan balance, usually with cash or secondary financing.

• Qualification – Buyers still need to meet the lender’s approval requirements.

• Time – Some assumptions can take longer due to lender processes.

• VA loan caveat – If the buyer is not a veteran, the seller’s VA entitlement may remain tied up until the loan is paid off.

How to Start the Process

1. Seller requests assumption eligibility from their lender.

2. Buyer applies with the lender for approval.

3. Both parties agree on the purchase price and handle the down payment difference.

4. Lender issues formal approval and transfers the loan.

Pro Tips for 2025

• Get the lender’s assumption requirements in writing before going under contract.

• Factor in the down payment gap early to avoid surprises.

• Work with an agent who has closed assumption deals before.

• Ask about any lender fees or restrictions on assumption.