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What is an Assumable Loan?
An assumable loan means a buyer can take over your existing mortgage — the rate, balance, and terms — instead of getting a brand-new loan.
If your interest rate is lower than today’s market rate, this could make your home more attractive to buyers.
Why They’re Attractive to Buyers
- Lower interest rate than current market rates
- Lower monthly payment potential
- Fewer closing costs compared to a new mortgage
- Appraisals/reports may be waived, saving money
- Can make your listing stand out against other homes
How to Know if Your Loan is Assumable
| Loan Type | Assumable? | Notes |
|---|---|---|
| FHA | ✅ Yes | Buyer must qualify with lender; small assumption fee |
| VA | ✅ Yes | Buyer must qualify; seller’s entitlement may stay tied up unless buyer is VA-eligible |
| USDA | ✅ Yes | Qualification required; rural property loans |
| Conventional | ❌ Generally No | Most have “due-on-sale” clause |
| Private/Seller-Financed | ✅ Possible | Depends on note/deed of trust terms |
Challenges & Considerations
- Equity gap: Buyer may need large down payment or secondary financing
- Lender processing time: Can take longer than a traditional sale
- Qualification: Buyer must meet lender’s credit/income requirements
- VA entitlement: Seller may lose ability to use VA benefit until entitlement is restored
Assumable Loan Process
- Seller confirms loan type and assumability
- Buyer applies with seller’s lender for approval
- Lender reviews buyer’s qualifications
- Buyer and seller agree on sale price and equity funding
- Lender processes assumption paperwork
- Closing: Loan transfers to buyer; seller released from liability (if applicable)
Is my Loan Assumable? Here is what to check:
1. Check Your Loan Documents
Look at your Promissory Note and Deed of Trust or Mortgage. Search for:
- Assumption Clause
- Due-on-Sale
2. Call Your Loan Servicer. Ask:
“Can you confirm whether my loan is assumable and, if so, what the process and fees will be?”
*The phone number is on your monthly mortgage statement.
Thinking of Selling?
If you want to know whether your loan is assumable — and how it could help you sell for more — reach out today. I’ll help check your loan type and guide you through the process.
Want to work with us? Here are some ways to get involved.
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Search the entire MLS for your Central Coast home. Looking for a home on the Central Coast?
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I’ll help you find the best local loan officer to get you competitive rates and the programs that best fit your individual needs. The Home Loan Process
