What is an assumable mortgage?
An assumable mortgage is a loan a buyer can take over from the seller, keeping its existing balance, interest rate and remaining term. FHA and VA loans can be assumed when the buyer is approved under each program's rules. Most conventional loans include a due-on-sale clause and can't be assumed.
How does an FHA assumption work?
An FHA assumption requires a credit review of the buyer. HUD's rule (24 CFR 203.512) says the loan holder must not approve the transfer unless at least one of the people taking over ownership is found creditworthy under HUD's standards, and the home must be a primary residence or a secondary residence HUD allows. Expect to apply and share income and credit information with the company that services the loan.
How does a VA assumption work?
A VA assumption must be approved when the loan is current, the buyer is under contract to buy the home and take on the loan, and the buyer is creditworthy under VA standards, according to VA Circular 26-23-10. When it's approved, ownership transfers and the seller is released from liability on the loan. Unless the buyer qualifies for a waiver, VA charges a Funding fee A one-time fee on VA loans that can be paid at closing or added to the loan. Veterans who receive VA disability compensation are exempt. See the full glossary based on the loan balance, which must be paid at closing and can't be added to the loan.
What happens to the seller's VA entitlement?
A VA seller gets their entitlement back after an assumption only if a qualified veteran buyer agrees to assume the loan and substitute their own entitlement, according to the VA. Otherwise the entitlement used for the loan generally stays tied to it until the loan is paid in full. Sellers who want to use a VA loan again should ask about this before agreeing to an assumption. See the VA loan guide.
How do I cover the gap between the loan and the price?
The buyer pays the difference between the loan balance and the purchase price at closing, which is the seller's equity. On a home the seller has owned for years, that gap can be large. Some buyers look at a second loan to cover part of it, if the servicer and the program allow one. Ask Tom early so the numbers are clear before you write an offer.
How long does an assumption take?
An assumption runs through the company that services the loan, not a new lender, so build extra time into your contract dates. For VA loans, servicers with automatic authority must decide within 45 calendar days of a complete application, according to VA Circular 26-23-10.
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Sources
- 24 CFR 203.512, Free assumability; exceptions (eCFR)
- VA Circular 26-23-10, Loan Assumption Procedures (May 22, 2023)
- U.S. Department of Veterans Affairs, Eligibility for VA home loan programs (restoring entitlement)
Checked October 2026. Limits and program rules change, so confirm current figures before you rely on them.
General information only, not tax or legal advice. Program availability, eligibility and terms vary by lender and are subject to change and to underwriting approval. Not a commitment to lend.