An assumable mortgage is a loan that can be transferred from the seller to the buyer at the original interest rate. When rates were near historic lows (around 3.5% in 2020-2021) and then rose sharply (to 7-8% in 2023+), assumable mortgages became valuable assets.

The chart on the page below shows monthly payments on a $500,000 loan over 30 years. At 3.5%, you pay $2,245/month. At 8%, you pay $3,669/month — a difference of $1,424/month or over $500,000 in total interest over the life of the loan.

Which Loans Are Assumable?

• FHA loans — Government-backed, always assumable
• VA loans — Assumable, even by non-veterans
• USDA loans — Assumable with lender approval
• Conventional loans — Typically not assumable (due-on-sale clause)

The Catch

You'll need to cover the difference between the home's current value and the remaining loan balance in cash or with a second mortgage. If a home is worth $700,000 but only $400,000 remains on the assumable loan, you need $300,000 to close the gap.

Seeing the difference

https://ryanwold.net/ui/assumables