What Is an Assumable Mortgage?
- By Jim Blackburn
- on
- 100 first time home buyer FAQs
1. An Assumable Mortgage Allows You to Take Over the Seller’s Loan
With an assumable mortgage, instead of applying for a new mortgage, you can take over the seller’s existing mortgage—including the interest rate and remaining balance.
This means you’ll pick up where the seller left off, keeping their favorable loan terms.
If the seller has a lower interest rate than current market rates, you could save a lot of money over the life of the loan.
It’s like inheriting the seller’s mortgage—but only if the loan allows it.
Before you assume a loan, understand what your monthly payments would look like. Calculate your FHA Purchase Loan Payment now to compare assuming an existing FHA loan versus getting a new one at today’s rates.
2. It’s a Great Deal if the Interest Rate Is Lower Than Current Rates
One of the biggest advantages of an assumable mortgage is the potential for lower interest rates.
If the seller’s loan was secured when interest rates were lower, you’ll benefit by keeping that lower rate instead of taking on a new, higher-rate loan.
This can save you thousands of dollars over the course of your mortgage—making it an attractive option, especially in high-rate environments.
Not eligible for FHA or VA? Calculate your Conventional Purchase Loan Payment now to see what your monthly costs would be with a new conventional loan versus assuming an existing mortgage.
Check the numbers, and if the interest rate works in your favor, it could be a big win. See how much you could save by comparing scenarios with our Compare 2 Rates Calculator.
3. Not All Mortgages Are Assumable
While some loans are assumable, not all are—so you’ll need to check with the lender.
FHA and VA loans are commonly assumable, but conventional loans often are not. Make sure you confirm with the lender whether the seller’s mortgage is assumable and if you meet the criteria.
For FHA loans, you can explore scenarios with our FHA Purchase Loan Calculator, or if you’re eligible, check VA scenarios with our VA Purchase Loan Calculator.
Thinking About an Assumable Mortgage? Let’s See If It’s Right for You
At Stairway Mortgage, we help you compare all your financing options—including assumable loans—so you can make the smartest choice for your situation.
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