Why Loan Assumptions Are a Game-Changer for Homebuyers

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.

Imagine securing a mortgage with an interest rate under 3% in today’s market—sounds impossible, right? Will you be surprised if I tell you that it’s not? There’s a way to lock in those low rates, and it’s called a loan assumption. Here’s what you need to know:

What is a loan assumption? It means you, the buyer, take over the seller’s mortgage at the same balance and interest rate. You’re not getting a new mortgage—you’re stepping directly into the seller’s deal. If they’ve got a sweet interest rate with their bank, you can take it over.

How does it work? The seller contacts their loan servicer, the company they send payments to, and requests an assumption package. That gets handed over to you, the buyer. From there, you apply directly to the seller’s lender to take over the mortgage. It’s a process that requires both parties to work together, but it can be so worth it.

Which loans can you assume? Typically, government-backed loans like FHA and VA loans are assumable. This gives you more flexibility when buying a home. FHA loans are pretty standard for assumptions, while VA loans are more desirable because even non-veterans can enter the deal.

Why is loan assumption such a big deal? This is where things get exciting. Buyers, you can take over a mortgage with a lower interest rate than anything available today—meaning you save money month after month. For sellers, offering loan assumptions makes your property stand out, attracting more buyers who want that sweet, low-rate deal. Did I mention that loan assumptions can come with fewer upfront costs than a traditional mortgage?

What’s the catch? It’s not all sunshine and rainbows. The process can take time—anywhere from 21 days to 6 months. And because loan assumptions have become rarer, not everyone knows about them, which can lead to confusion. Plus, depending on the home’s price, you may need to cover the difference between the purchase price and the remaining loan balance. It’s totally doable if you’ve got the cash or can negotiate.

Is a loan assumption right for you? Let’s say you’ve got your eye on a home listed at $715,000. The seller’s remaining mortgage? $560,000 at a low interest rate. Suppose you can assume that loan, you’re stepping into a deal that could save you considerable time compared to today’s rates. It’s a no-brainer if you’ve got the funds for the difference.

Loan assumptions are making a comeback—and they’re a win-win for buyers and sellers alike. This could be your ticket to securing that dream home without the nightmare mortgage rates in a challenging market.

Explore your options if you’re curious about how a loan assumption could work for you. Whether buying or selling, this strategy could open doors to opportunities you didn’t think possible. Why settle for today’s high rates when you could lock in something better? Call me at +1 (916) 257-0893 or send me an email at frank@frankvalente.com to start exploring your options.