How To Find a 4 Assumable Loan for Your New Home

By Frank Valente

Associate Broker at eXp realty of California. Active agent and broker since 2003 in the Sacramento Region. Retired from the Navy in 2002 after 24 years as a Commander. Former Surface Warfare Officer.

Lately, I’ve been getting a question all the time: “How can I find a 4% assumable loan?” The good news is that it’s not as hard as you might think. With rising interest rates, assuming a lower-rate loan can be a smart financial move for buyers and a great selling point for homeowners.

So, why would you want to assume a loan? Imagine buying a home that already has a 4%, 3%, or even a 2.75% mortgage. Assuming that existing loan could save you a significant amount of money compared to taking out a new mortgage at today’s higher rates.

Not all loans are assumable, though. Government-backed loans like FHA and VA loans typically allow assumptions. Conventional loans, such as those from private lenders like Chase or Bank of America, may or may not be assumable—you’ll need to check with the lender to be sure.

If you’re selling a home, letting a buyer assume your lower interest rate could be a big competitive advantage. Start by contacting your current mortgage company and requesting an assumption package. This package works similarly to a loan application for the buyer. The lender usually assigns a loan officer or processor to help manage the process, so it’s straightforward with a little preparation.

However, it’s important to understand how the numbers work. Let’s say you’re selling a home for $800,000, but your mortgage balance is only $150,000. A buyer could assume that $150,000 loan, but they’d need to bring $650,000 in cash to cover the difference. That’s not practical for most buyers. But if your loan balance is higher—say $600,000—the buyer only needs to cover $200,000, which is much more manageable.

For sellers, marketing an assumable loan can make your property stand out. On the other hand, buyers can take advantage of much lower interest rates, avoiding today’s 6% to 7% mortgage rates by assuming an existing low-rate loan.

One challenge is that assumable loans aren’t widely used today. They were more common in the 1970s, so many agents and loan officers might not be familiar with the process. If you’re interested in an assumable mortgage, be prepared for a learning curve—but the savings could be worth it.

If you’re wondering how to find assumable loans, sellers should start by confirming if their loan is assumable and making sure their agent promotes it in the listing. As a buyer, I have access to databases that can help identify assumable loans and their interest rates.

If you have any questions about how assumable loans work or how to find one, feel free to call at 916-257-0893 or email frank@frankvalente.com. I look forward to hearing from you!