Assumable Mortgage

Buyers Can Assume a Mortgage Direct from Seller


An assumable mortgage is one that a buyer can take over, or assume, from the seller. This is typically an involved process, and it is not necessarily possible, depending on the situation; but it can be an excellent benefit to sellers and buyers.

When you take over an assumable loan, you get the same interest rate, repayment period, balance and other terms instead of getting a new mortgage. In theory, any home loan can be assumed, but there are only two common types of loans that allow this: VA loans and FHA loans. Most conventional loans cannot be assumed by a new borrower.

In many cases, depending on current interest rates, assuming an existing loan can pay off for the buyer with fewer costs and a lower mortgage payment.

Assumable Loans

Qualifications Required for Assumable Loans

You will need to meet the same qualifications to take over a loan as you would to get your own mortgage.

This means we will check your credit, assets, and income to make sure you can afford to repay the loan.

Assumable Mortgage

You Pay the Seller Instead of Making a Down Payment

If you choose to get a new loan, you will typically be required to make a down payment of 3.5 to 20 percent or more. When you assume a loan, you do not have to make a down payment.

Instead, you pay the seller compensation for the equity they have built in the home, or the difference between their mortgage balance and what the home is worth.

Assuming Existing Loan

Full Loan Cost May Not Be Covered

When you assume a loan, the mortgage may not cover the cost of the home. This means you may need additional financing or a down payment, along with the payment you make to the seller.

Seller's Liability Release

Sellers also enjoy advantages when a buyer takes over their loan. The property can be more attractive to buyers if the mortgage has an interest rate lower than current rates, or if the seller has built very little equity that must be paid to him or her. There can be a big catch to assumable loans: The seller can still be responsible for the debt, even after the buyer assumes the loan, if the lender does not release the original borrower.

Loan Repayment period

Assumable VA Loans

VA loans are always assumable, as military members often need to relocate. The catch, however, is that VA loans are associated with the veteran's entitlement. The seller's entitlement can remain attached to the mortgage if the buyer is not also a veteran or lacks his or her own entitlement. This is important to understand, as it will keep sellers from using their own entitlement again to get a new mortgage.

If this entitlement stays on the loan and the new borrower defaults, the seller may have difficulty using his or her VA entitlement in the future.

Assumable VA Loan

Should You Assume a Loan?

The answer to this depends. A buyer will enjoy the greatest advantage if the seller's loan has more attractive terms than are typical at the time. For example, the interest rate can be significantly lower than current average rates, potentially saving buyers hundreds of dollars a month on their mortgage payment.

Assuming a loan is usually a good deal if the buyer does not need to pay more than 10 to 20 percent of the purchase price, in cash, to the seller.

Should You Assume a Loan?

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Mortgage Investors Group, based in Tennessee, offers residential financing in a number of states in the southeast, See MIG Service Areas. Terms and conditions to apply to home financing. We want to share with you the loan terms vary based on several characteristics and your financial profile. These include but are not limited to loan program, loan purpose, occupancy, credit history, credit score, assets, and other criteria per loan type. The repayment terms and interest rate may vary from time to time. The terms represented here are based on certain assumptions outlined below and/or noted on the loan outline page. Additional details concerning privacy, program disclosures, licensing specifics may be found at Legal Information.

MIG Loan Officers will help gather the information needed for an individual assessment to provide home financing which matches the loan characteristics with your home financing needs based on your financial profile, when you are ready to begin a full loan application. For estimates and general information before that step, the basis for which the mortgage financing information are as follows:
  • Rates are subject to change at any time.
  • Rate locks are available at current terms for 30 to 180 days based on program type, credit profile, property location, etc. which will affect the available rate and term.
  • Payments will vary based on program selection, current rates, property location, etc.
  • Not all programs are available in all states.
  • Some loan programs may not be available to first time home buyers.
  • Terms and conditions apply, which may include restrictions or limits per loan program.
  • Information is generally based on primary residence occupancy with no cash out when refinancing.
  • Unless otherwise stated, terms shown are estimates based in part on credit score of 700 or higher; owner occupancy, escrow account is established for taxes and insurance(s); debt-to-income ratio no higher than 43.0%; PMI applies to conventional loan programs over 80.0% LTV; VA,FHA & RD require insuring fees included in loan and/or payment; fixed rate, 30 year term.

An MIG Loan Officer is available to help with your financial details to determine which characteristics apply to your situation for a personalized look into which loan program best fits your home financing needs. Please use the Find a Loan Officer link or reach out to Mortgage Investors Group at 800-489-8910. Equal Housing Lender 1.2020