What to know about assumable mortgages as rates stay above 7%
Elevated rates have made assumable mortgages more appealing. But there aren’t many available — and many consumers aren’t aware that the option even exists.
Key points:
- Buyers could save quite a bit of money each month by taking on an assumable loan, particularly if the original loan holder secured it during the ultra-low rate environment of the Covid-19 pandemic.
- Most assumable mortgages are FHA or VA loans, which can make it challenging to find one. Additionally, the down payment size required to take on an assumable mortgage is often much larger than that required to secure a typical 30-year mortgage.
- Still, assumable loans could help some buyers bridge the affordability gap — and listing agents should be aware of the option and market it when their seller client has one.
With elevated mortgage rates pricing so many potential homebuyers out of today's housing market, it seems like assumable mortgages should be a hot topic within the industry. But that's not the case — partly due to the challenges involved with assumable mortgages, but also because many consumers aren't aware that the option exists.
A buyer who opts for an assumable mortgage instead of securing a new one takes over a homeseller's loan at the rate that seller negotiated. This could be beneficial for buyers who can't afford 30-year rates today — particularly if they assume a loan that originated during the Covid-19 pandemic at an ultra-low rate.
Nearly half of homeowners with low rates are keeping them
Current elevated rates stand in contrast with the comparatively lower rates consumers were used to for many years. The 30-year fixed-rate mortgage stayed below 6% between late 2008 and 2019 and dropped even further — into the 3% range — during the pandemic, according to Freddie Mac data.
"If rates are low for long enough, then you just become accustomed to the way that you're doing business and you don't have to think about that," Andy Taylor, who co-founded RetroRate in 2025, said in a recent interview with Real Estate News.
But rates have climbed since the pandemic, and many homeowners who may be interested in moving don't want to give up the low rates they secured in the early 2020s. According to a National Bureau of Economic Research paper published in 2024, rising rates in 2022 and 2023 are estimated to have cut mobility by 16% for households with mortgages and resulted in $20 billion of "deadweight loss."
This trend is further evidenced by Realtor.com data, which suggests that nearly half of all current mortgages have rates of 4% or lower.
Few qualify for assumable mortgages
Another reason many consumers don't hear much about assumable mortgages is because a handful of challenges are involved with securing them, including:
Few loans qualify: Typically, only government-backed loans — like FHAs or VAs, which make up about 1 in 10 loans — are assumable.
Further complications for VA loans: If a VA loan is assumed by a nonveteran buyer, the seller risks leaving their entitlement tied up.
Bigger down payment needed: A buyer who opts for an assumable mortgage usually must come up with a large down payment so that they can pay the gap between the home's sale price and the seller's remaining loan balance. For example, if a seller listed their home for $500,000 and still owed $200,000, the buyer would need a $300,000 down payment.
Even with these drawbacks, assumable loans can result in significant buyer savings. Still, the total number of mortgage assumptions remains small, according to the Bipartisan Policy Center.
More awareness needed
While the elevated rates of recent years have increased consumer awareness about assumable mortgages, Taylor said he still comes across real estate agents who aren't mindful of the option.
RetroRate, which was initially founded to focus on helping individual agents, is now finding that it can better spread that awareness by working with multiple listing services to add an assumable loan category option to home listings. In this low-demand environment, Taylor said having a seller flag that a buyer could take over their loan may help draw interest.
The company's recently created Assumable Atlas tool, which tracks how many assumable loans are available nationwide, estimates that 120,000 for-sale listings have assumable loans while 10.6 million other homes that carry assumable mortgages aren't currently for sale.
When including homes that aren't for sale, Texas, Florida and California have the highest number of potential assumable loans. Texas' concentration of VA loans is particularly high in the San Antonio area, where the average rate for those assumable loans is in the 4.6% range. "It's an exceptional place if you're interested in finding a deal," Taylor said.
How can agents help?
Since affordability continues driving strong headwinds in the housing market, listing agents who have clients with assumable loans should be marketing those loans like they would valuable property amenities, such as pools or granite countertops, according to Taylor.
"Once you actually have gotten buy-in from the seller that this a plan that you should pursue, then what that does is allow you (the agent) to work with the servicer to get the initial materials that they might need for a new buyer," Taylor said, adding that having the documentation in hand will cut down on the closing period.
For buyer agents with prospective buyers who are waiting for rates to fall, finding a home with an assumable loan option — a detail that may appear in a listing's private remarks section — could help get those clients off the sidelines.