Assumable Loans: The Hidden Opportunity Most Homebuyers Don't Know Exists

By Mark Sewell, REALTOR® | eXp Realty

What Is an Assumable Loan?

Imagine being able to buy a home and keep the seller's incredibly low interest rate instead of getting today's higher market rates.

That's exactly what an assumable loan allows.

Instead of applying for a brand-new mortgage at current interest rates, qualified buyers can "assume" or take over the seller's existing mortgage, including the remaining balance, interest rate, and loan terms.

With mortgage rates much higher than they were just a few years ago, assumable loans have become one of the biggest opportunities in today's real estate market.

Why Assumable Loans Matter Right Now

Between 2020 and 2022, millions of homeowners locked in mortgage rates between 2% and 4%.

Today, many buyers are financing homes at rates that are significantly higher.

That difference can mean hundreds—or even thousands—of dollars in monthly savings.

For many buyers, an assumable loan can make the difference between comfortably affording a home and being priced out of the market.

Which Loans Are Assumable?

Not every mortgage can be assumed.

The most common assumable loans include:

• VA Loans

• FHA Loans

• USDA Loans

Most conventional loans are not assumable.

One of the first things I do for my clients is identify which homes actually qualify before they spend time looking at properties that won't work.

The Biggest Benefit: Lower Monthly Payments

Let's compare two buyers purchasing the same home.

Buyer A

• Purchases with today's market interest rate.

Buyer B

• Assumes the seller's existing 2.75% mortgage.

Both own the exact same house.

The buyer with the assumable loan could save hundreds of dollars every month—and potentially tens or even hundreds of thousands of dollars over the life of the loan.

That's money that stays in your pocket instead of going toward interest.

The Cash Gap Explained

One of the biggest misconceptions about assumable loans is that buyers only need a standard down payment.

That's not always true.

When assuming a loan, you're taking over only the seller's remaining loan balance.

If the purchase price is higher than that balance, the buyer must cover the difference.

For example:

Purchase Price: $600,000

Remaining Assumable Loan: $450,000

Cash Gap: $150,000

That gap can be covered in several ways:

• Cash from the buyer

• A second mortgage

• Home equity from another property

• Gift funds (when allowed by the lender)

Every transaction is unique, which is why having the right lender and REALTOR® is so important.

Can You Get a Second Loan?

Yes.

Many buyers use a second mortgage to help bridge the cash gap.

The first mortgage remains the seller's low-interest assumable loan.

The second loan finances part or all of the remaining difference.

This strategy often results in a much lower blended payment than financing the entire purchase at today's market rates.

Do You Have to Be a Veteran to Assume a VA Loan?

Not necessarily.

One of the biggest myths is that only veterans can assume VA loans.

In many cases, non-veterans can also assume a VA loan if they meet the lender's qualification requirements.

However, there are important considerations involving the seller's VA entitlement that should be discussed before moving forward.

Every situation is different, and understanding these details can protect both the buyer and seller.

Who Qualifies?

Just because a loan is assumable doesn't mean everyone automatically qualifies.

Buyers still need to meet the lender's approval requirements, which typically include:

• Credit qualification

• Income verification

• Debt-to-income guidelines

• Underwriting approval

The approval process is similar to obtaining a mortgage, but you're qualifying to take over an existing loan instead of creating a new one.

Why Aren't More People Talking About This?

Most buyers have never heard of assumable loans.

Many real estate agents rarely work with them because they require specialized knowledge and a different transaction process.

As a result, incredible opportunities are often overlooked simply because buyers don't know they exist.

That's changing.

As higher interest rates continue to impact affordability, assumable loans are becoming one of the smartest financing strategies available.

Why Working With the Right REALTOR® Matters

Finding assumable loans isn't as simple as searching any real estate website.

You need someone who knows how to identify qualifying properties, explain the financing strategy, coordinate with lenders familiar with assumptions, and guide you through the process from start to finish.

That's exactly what I help my clients do.

Whether you're buying your first home, moving up, or looking for an investment property, assumable loans may open doors that traditional financing simply can't.

Final Thoughts

Assumable loans aren't a loophole—they're one of the most underutilized opportunities in today's housing market.

The right property with the right existing loan could save you substantial money over the life of your mortgage while making homeownership more affordable today.

If you're curious whether an assumable loan could work for you, I'd be happy to walk you through the process and show you available opportunities in the Sacramento area.

Knowledge is power—and in today's market, understanding assumable loans could give you a significant advantage over other buyers.

Ready to Learn More?

If you're buying or selling a home in the Sacramento region and want to explore assumable loan opportunities, let's connect.

I specialize in helping buyers identify homes with assumable financing and guiding them through every step of the process.

Your next home may already have an incredible interest rate waiting for you.