High interest rates are one of the biggest challenges that homebuyers face in the current market. With mortgages hovering above 6%, monthly payments are much less affordable than they were just a few years ago, leaving many buyers waiting for the market to shift. But there’s another option hiding in plain sight: assumable mortgages. These allow a buyer to take over a seller’s existing low‑rate loan, offering a more affordable path to homeownership without relying on future rate changes.
This guide walks through how assumable mortgages work, which loans qualify, and what buyers should know before pursuing one.
An assumable mortgage is when a buyer takes over a seller’s existing mortgage. That means the buyer inherits the terms of loan, such as:
Essentially, the buyer picks up the loan exactly where the seller left off – allowing them to get a much lower interest rate than what is available in today’s market. The rest of the process generally follows a conventional mortgage transaction: real estate agents still represent both parties, there are closing costs involved, the seller is released from all liability, and the buyer ultimately gets full ownership of the property.
A lower interest rate can drastically cut a buyer’s monthly mortgage payments. For example:
Effectively, the buyer would save $1,000 per month compared to taking out a new loan. That’s the power of an assumable mortgage.
When assuming a loan, the buyer takes over the seller’s remaining balance and must cover the seller’s equity.
When a buyer assumes a seller’s mortgage, they take over the seller’s remaining mortgage balance. This means the buyer needs to compensate the seller for the equity they’ve already built in the form of a downpayment.
Seller Equity = purchase price – remaining mortgage balance
Example:
That equity becomes the buyer’s required down payment.
Buyers can cover this equity gap through:
It’s important to note that although second mortgages also come with a higher interest rate, the “blended” interest rate with the assumed original mortgage still typically results in a lower interest rate than taking out a brand new mortgage. With Roam’s secondary financing, buyers can put as little as 5% down.
Not every mortgage can be assumed. By law, government-backed loans — FHA, VA, and USDA — are generally assumable:
USDA loans can be assumed under two structures:
Conventional loans come from private financial institutions as opposed to the government. Most conventional loans are not assumable, but exceptions exist depending on the situation and lender guidelines.
Understanding both the advantages and limitations of assumable loans helps buyers decide whether an assumption is the right fit for them.
Pros
Cons
Roam helps coordinate the process end-to-end, from identifying assumable opportunities to moving the transaction swiftly through closing.
The process follows clear steps:
Roam supports buyers throughout this process to ensure clarity and efficiency.
Although they may sound similar, these are two different structures.
In a Subject-To Transaction:
In a Mortgage Assumption:
Assumptions are clearer, more secure, and preferable for most buyers and sellers.
Assumable mortgages provide a practical path to affordability in a high‑rate market. They can expand purchasing power, reduce monthly payments, and make homeownership more accessible.
Roam connects buyers to verified assumable listings and guides them through each step of the assumption process.
Explore assumable homes with Roam today