How to Buy a House with an Assumable Mortgage: The Smart Strategy to Lower Your Monthly Payments in a High-Interest Market

Buy a home with an assumable mortgage.

Assumable mortgages allow a buyer to take over the seller’s existing loan — including its interest rate, remaining balance, and repayment schedule. If the seller locked in a rate between 2020 and 2022 (often between 2% and 3.5%), assuming their loan can save you hundreds — sometimes thousands — of dollars per month.

This guide will show you everything you need to know:

• What assumable mortgages are and how they work
• How to find homes with assumable mortgages
• Exactly how much money you can save (with real examples)
• Step-by-step instructions to buy a home using an assumable loan

What Is an Assumable Mortgage and How Does It Work?

Most mortgages in the U.S. are not assumable. Conventional loans typically include a “due-on-sale” clause, which means if the home is sold, the loan must be fully paid off and replaced with a new mortgage.

However, FHA, VA, and USDA loans are different. These government-backed loans generally allow a qualified buyer to “assume” the existing loan. Also, some conventional loans are assumable, although it’s a minority of them.

What an Assumable Mortgage Actually Means

When you assume a mortgage, you take over:

• The remaining loan balance
• The interest rate
• The repayment term
• The exact same monthly principal & interest payment

It is as though you’re stepping into the seller’s financial shoes, but with your own income, credit, and qualification.

Types of Assumable Mortgages

VA Loans

• Most common assumable loan type in our area
• Assumption frees the seller’s VA entitlement only if the buyer is VA-eligible
• You do not need to be a veteran to assume a VA loan if the seller agrees

FHA Loans

• You do not need VA eligibility to assume an FHA loan
• You do not have to be a first-time home buyer
• You must intend to occupy the home as your primary residence

USDA Loans

• Limited but available
• Mainly in rural areas

Why These Loans Are Assumable

Government-backed loans are designed to encourage home ownership and stability. Assumability is one of the built-in benefits. Lenders must still approve the new buyer, but the underlying loan stays in place.

General Requirements to Assume a Mortgage

• Income verification
• Debt-to-income qualification
• Creditworthiness (typically 620+)
• Approval from the loan servicer
• Assumption fees (generally much lower than originating a new mortgage)

Unlike with a new mortgage, you are not shopping for new loan terms. The terms already exist – you’re inheriting them.

Pros and Cons of Assumable Mortgages

Pros

• Huge monthly savings from a lower interest rate
• Lower lifetime interest cost
• Shorter payoff term
• Great for buyers with large down payments

Cons

• You must cover the equity gap
• Assumption approval takes longer than a traditional mortgage
• Not every home has an assumable loan

How to Find Homes for Sale with Assumable Mortgages (Without the Guesswork)

Most aspiring home buyers will benefit greatly from the savings of a mortgage assumption. The real challenge isn’t determining whether the loan assumption will save you money, it’s finding a house you like that has an assumable mortgage.

That’s exactly where we come in.

As real estate agents who specializes in assumable VA and FHA loans here in the Colorado Springs area, we handle the research, verification, and screening for you so you’re only looking at real, qualified assumable mortgage opportunities—not dead ends or misleading listings.

Why You Need a Specialist (Not Just a Search Bar)

Many homes with assumable mortgages are not clearly labeled as such online, so even motivated sellers with fantastic 2–3% interest rates may not be marketing their property properly.

Because we work with assumable loans regularly, we know exactly what to look for, including:

• Which homes have low-rate VA or FHA loans
• Listing details that indicate an assumable opportunity
• Which servicers respond quickly — and which slow approvals
• How to verify assumability, interest rate, remaining balance, and eligibility

You don’t need to sift through MLS data, real estate websites, forums, or social media groups. We’ve already done that work for you.

What We Do for You Behind the Scenes

Once we know your down payment, desired monthly payment, and preferred neighborhoods, we begin identifying the best assumable mortgage opportunities.

1. Checking Loan Eligibility

We confirm loan type:

• FHA
• VA
• Conventional (less common)

2. Obtaining Essential Loan Details

We verify:

• Current interest rate
• Remaining balance
• Monthly payment
• Loan servicer
• VA entitlement requirements (if applicable)

3. Running the Numbers for You

• Monthly payment
• Required cash-to-close
• Long-term savings

If it isn’t a good financial deal, we tell you immediately.

What This Means for You

• A curated list of verified assumable mortgage properties
• Expert guidance through every step
• Access to opportunities most buyers never hear about
• A significantly lower monthly payment

How Much You Can Save by Assuming a Low-Rate Mortgage (Real Examples + Updated Math)

One of the biggest advantages of an assumable mortgage is the ability to instantly “step into” a loan with a far lower interest rate than anything available today.

Example Scenario

• Home price: $550,000
• Seller’s current loan balance: $350,000
• Interest rate: 2.75%
• Buyer’s down payment: $200,000
• Today’s interest rate: 6.5%

A) Monthly Payment if You Assume the Seller’s Loan

Monthly Principal & Interest: ≈ $1,430

B) Monthly Payment if You Get a New 6.5% Loan

Monthly Principal & Interest: ≈ $2,212

Your True Monthly Savings

$2,212 – $1,430 = $782 saved every month

Savings Over Time

• One year: ≈ $9,384 saved
• Five years: ≈ $46,920 saved
• 30 years: ≈ $333,000 saved

This is the power of assuming a low-rate mortgage.

Understanding the “Equity Gap” and Cash-to-Close

The “equity gap” is simply:

Sale price – seller’s remaining loan balance

You can cover the gap with:

• Cash
• Second loan
• Gift funds
• Equity from another property

Buyers with large down payments are the biggest winners with assumable mortgages.

When an Assumable Mortgage Makes the Most Sense

• You have a large down payment
• You want a lower monthly payment
• You are priced out by current rates
• You’re shopping in an area with many 2020–2022 purchases

Step-by-Step: How to Buy a Home Using an Assumable Mortgage

Step 1: Get Pre-Qualified

This demonstrates financial strength and prepares you for assumption approval.

Step 2: Submit an Offer That Reflects the Assumption

• State the intent to assume
• Specify loan balance
• Clarify cash or second loan
• Add seller concessions & contingencies

Step 3: Apply With the Current Servicer

The seller’s loan servicer handles approval.

Step 4: Servicer Underwrites the Assumption

This is slower than a typical mortgage. 30–90 days is common.

Step 5: Close and Take Over the Loan

Your payment begins at the seller’s interest rate.

Who Should Consider Buying With an Assumable Mortgage?

• First-time buyers with strong savings
• Move-up buyers with equity
• Buyers wanting payment stability
• Anyone tired of waiting for rates to drop

Common Mistakes to Avoid When Assuming a Mortgage (and How We Keep Our Clients Safe)

1. Thinking Any Loan Is Automatically Assumable

We verify loan type and assumability with 100% certainty.

2. Overlooking VA Entitlement Rules

We ensure sellers understand your VA eligibility advantages — or find lenders who allow non-VA buyers.

3. Underestimating the Cash Needed for the Equity Gap

We calculate exact numbers early, avoiding surprises.

4. Working With an Agent Who Isn’t Experienced

Most agents have never closed an assumption. We’ve handled many.

5. Expecting Assumption Approval to Be Fast

We manage expectations and ensure the process moves efficiently.

Final Thoughts: Is an Assumable Mortgage Right for You?

If you’ve saved a large down payment but feel priced out by high monthly mortgage payments, an assumable mortgage can be the single most powerful tool to make homeownership affordable.

Instead of waiting for interest rates to fall, you can:

• Lock in a 2%–4% interest rate
• Slash your monthly payment
• Build equity faster
• Lower your long-term cost of homeownership

Assumable mortgages are an underused advantage. With the right guidance, you can save tens — even hundreds — of thousands of dollars over the life of your loan.