In a gridlocked market, it’s time to take assumable loans seriously
Assumable mortgages have been largely ignored by the lending industry, but that’s a missed opportunity in an era of sidelined buyers and sellers. Here’s why.
Key points:
- Up to a quarter of existing mortgages are assumable, meaning millions of buyers could potentially secure low-rate loans in a high-rate environment — offering huge savings.
- Despite the benefits, most consumers, agents and lenders are either unfamiliar with assumable mortgages or don’t fully understand them.
- "If you're a listing agent and you're not highlighting an assumable mortgage in your pitch, you're missing one of the most valuable features of the home," said RetroRate Founder Andy Taylor.
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The views expressed in this column are solely those of the author.
In a housing market dominated by near-7% mortgage rates and paralyzed by historic inventory lows, the affordability crisis is a defining reality.
Buyers are sidelined. Sellers are locked into sub-4% mortgages. Agents are caught in the middle, trying to make deals work in a frozen system. But amid all this gridlock, one powerful solution sits in plain sight — underutilized, underpromoted and largely ignored by the very industry built to facilitate homeownership: assumable mortgages.
Millions of low-rate mortgages are eligible
Assumable mortgages allow a homebuyer to take over the seller's existing loan — including its interest rate and remaining balance. In today's market, that means a buyer could acquire a home with a 3% mortgage rather than starting fresh at 7%. The monthly savings are substantial — and immediate.
A buyer assuming a $350,000 loan at 3% would pay around $1,476/month. That same loan at 7%? $2,329/month — a difference of $853/month, or over $10,200/year in savings.
This isn't a niche scenario. Roughly 20% to 25% of U.S. mortgage holders have FHA, VA or USDA loans — the types that are assumable. With over 80 million owner-occupied homes in the U.S., that's an estimated 16–20 million homes with assumable financing potential. Additionally, more than 80% of U.S. mortgages carry interest rates below 6%, and nearly a quarter are under 3%, according to Redfin. These legacy low-rate loans represent a massive affordability advantage
"I'm willing to bet that in many situations, assuming a loan is actually a very good option for most buyers," said Andy Taylor, founder of RetroRate, a company that helps real estate professionals identify and close assumable transactions. "And if it falls through, that broker or lender still owns the relationship. It's a win either way."
Why lenders don't promote assumable mortgages
Assumables don't fit cleanly into the mortgage industry's current machinery:
No new loan = no new origination volume
No comp plan or pull-through incentives
Longer closing timelines with paper-heavy processing
Coordination needed between origination, servicing, and sometimes investor oversight
In other words, assumables don't help the lender's short-term bottom line.
"There's this perception that lenders will lose out by not originating a new 7% loan," Taylor said. "But really, your best customer is the one you already have. Keeping low-rate loans on your books isn't a loss — it's cash-generating, low-risk servicing."
That oversight could diminish the mortgage industry's long-term relevance. A handful of real estate startups have already stepped in to help buyers secure assumable mortgages while the lending industry drags its heels.
Why more buyers aren't securing assumable mortgages
Let's be clear: Assumables aren't a simple plug-and-play. Here's where the real pain points lie:
Equity gaps: Buyers often need to bring cash to cover the difference between the seller's loan balance and market value.
Qualification process: Buyers must still qualify with the seller's servicer, a process that can vary widely and lack transparency.
Timeline and paperwork: FHA assumptions are routed through the existing servicer, and typically take 30–90 days to close, according to HUD.
Limited to government loans: Conventional loans are generally not assumable.
Servicer bottlenecks: Many lenders lack the infrastructure or incentive to process assumptions quickly.
How lenders can add value
Despite these frictions, this is precisely where savvy lenders and originators can add real value.
Imagine a loan officer who identifies assumable opportunities on listings, calculates savings and cash to close, coordinates with all of the parties involved and lays out ways to fill equity gaps.
This level of strategic guidance builds loyalty and drives referrals, yet most real estate professionals don't even know where to start. Moreover, MLS systems rarely flag assumable loan status, and major portals like Zillow and Redfin don't highlight them either.
The result? A shadow market of affordability — hidden in plain sight.
Long-term dividends
Some lenders may ask, "If I'm not originating a new loan, what's in it for me?" Plenty.
In addition to becoming a go-to for referrals, lenders may end up originating a second loan for the buyer — who could also be a future refi or move-up purchase client — and they collect valuable data others are ignoring.
According to the MBA's 2024 Q1 report, lender margins remain razor-thin, with firms aggressively chasing any available volume. Assuming mortgages isn't about volume this quarter. It's about relevance next quarter, and next year.
"If you're a loan officer and you've got a pool of well-qualified buyers sitting on the sidelines, being able to connect them to assumable opportunities through your agent relationships — that's real leverage," Taylor said. "That's what keeps the referral flywheel turning."
Here's what that looks like:
Educate the market — buyers, agents and sellers
Support assumptions with real expertise and creative solutions
Capture future business from buyer clients
Build brand trust in a market where few lenders stand out
Leverage insights to identify and target new opportunities
Assumable mortgages aren't a housing market panacea— but they offer a rare opportunity to bring relief to buyers and unlock stuck inventory.
"If you're a listing agent and you're not highlighting an assumable mortgage in your pitch, you're missing one of the most valuable features of the home," Taylor emphasized. "You're talking about granite countertops instead of a 3% interest rate."
And for the lender or originator willing to lean in? They represent a chance to lead with strategy, and articulate value well beyond a commoditized interest rate.
"Lenders are spending a fortune just to get a shot at a customer," Taylor said. "And here we are, pushing those same customers away because the transaction isn't easy."
Coby Hakalir has been a leader in the mortgage industry for almost three decades. He currently leads the mortgage banking and mortgage tech division for T3 Sixty, one of real estate's most respected management consultancies, and resides in Northern California. (Note: Real Estate News is an editorially independent division of T3 Sixty.)