Assumable Loan

In depth

Assumable loans let the buyer step into the seller's mortgage shoes. FHA, VA, and USDA loans are generally assumable with lender qualification; conventional loans rarely are. Misconception: assumption is not the same as subject-to; assumption involves lender approval and a release of the seller, while subject-to does not. Practically, in rising-rate environments, assumable loans become valuable because buyers preserve below-market rates. Sellers can market assumability as a selling point. Assumption involves lender review of the buyer's qualifications, an assumption fee, and execution of assumption documents. Conventional loans typically cannot be assumed without lender consent and often the lender will not consent. VA assumption requires entitlement substitution to free the seller's VA eligibility.