Assumable Mortgages (FHA, VA, USDA): How to Find One, Qualify and Cover the Equity Gap
Taking over a seller's low-rate loan is one of the few ways to buy a home at yesterday's rates. Here is which loans qualify, how the equity gap works and how to decide whether an assumption beats a new mortgage.
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📐 Figures verified Sep 28, 2026 against the VA's funding fee page, HUD's FHA loan guidance, USDA Rural Development's guaranteed loan program, the federal due-on-sale law (12 U.S.C. 1701j-3) and Freddie Mac's rate survey. The worked example is computed from standard loan formulas. This is general information, not financial advice. How we check numbers →
FHA and VA loans, and some USDA loans, can be taken over by a qualified buyer at the seller's original rate. The catch is the equity gap: you pay the difference between the price and the loan balance in cash or with a pricier second loan. In our example, assuming a 3.25% loan still saves about $303 a month versus a new loan near 6.9%.
Numbers That Matter
| Figure | Amount | Source | Verified |
|---|---|---|---|
| VA loan assumption funding fee | 0.5% of the loan balance | U.S. Department of Veterans Affairs | Sep 28, 2026 |
| FHA loans | Assumable by a buyer who qualifies with the lender | HUD | Sep 28, 2026 |
| USDA guaranteed loans | Program rules, including income and property eligibility | USDA Rural Development | Sep 28, 2026 |
| Conventional loans | Usually carry due-on-sale clauses, with limited exceptions such as transfers at death or divorce | 12 U.S.C. 1701j-3 | Sep 28, 2026 |
| New 30-year loan rate, September 2026 average | About 6.86% | Freddie Mac PMMS | Sep 28, 2026 |
Which Loans Can Be Assumed
- FHA: assumable if the buyer meets the lender's credit and income standards.
- VA: any qualified buyer can assume, veteran or not. If a non-veteran assumes, the seller's VA entitlement generally stays tied to the loan until it's paid off, unless a veteran buyer substitutes their own entitlement.
- USDA: can be assumed in some cases, with USDA approval and the program's income and location rules.
- Conventional: usually not, because of due-on-sale clauses.
The Equity Gap
You take over the seller's remaining balance, not the whole price. The difference, often large after years of price growth, must come from savings or a second mortgage or home-equity loan at today's higher second-lien rates. The blended rate still usually beats a new first mortgage when the assumed rate is low enough and the gap isn't too big.
How to Find and Close One
- Search listings that mention an assumable loan, or ask agents and sellers directly.
- Confirm the details with the seller's servicer: balance, rate, remaining term and assumption process.
- Apply with the servicer: you'll qualify much like a new loan, and assumptions can take longer than a typical closing.
- Arrange the gap financing before you sign, and build its timing into the contract.
- Make sure the seller is released from liability in writing once you assume.
Worked Example: Assume vs New Loan
- Assume: take over $280,000 at 3.25% with 25 years left ($1,364 a month) and borrow the other $80,000 on a 20-year second loan at 8.5% ($694). Total: $2,059 a month; blended rate about 4.42%.
- New loan: $360,000 at 6.86% for 30 years costs $2,361 a month.
- The difference: about $303 a month in favor of assuming. On a VA assumption, add the 0.5% funding fee, about $1,400.
Principal and interest only; second-loan rates and terms vary widely.
Decision Rules
If this, then that
- If the assumed rate is far below today's → even a pricey second loan can leave you ahead.
- If the equity gap is most of the price → the savings may vanish; run the blended numbers.
- If you're a veteran selling → prefer a veteran buyer who can substitute entitlement.
- If your timeline is tight → build extra time into the contract for the assumption.
- If you're the seller → get a written release of liability.
Mistakes to avoid
- Forgetting that you must fund the whole equity gap.
- Assuming a conventional loan is assumable.
- Skipping the release of liability as a seller.
- Ignoring VA entitlement effects when selling to a non-veteran.
- Comparing only the first-loan rate instead of the blended cost.
Related: what your low-rate mortgage is worth covers the lock-in math; FHA vs conventional loans compares loan types; home equity loans vs HELOCs covers second liens; and closing costs explained covers the rest.