Assumable Mortgages for Real Estate Investors: How to Buy Rental Properties at 2-3% in Colorado

Here's the problem with buying rental properties in Colorado right now.

A $400,000 single-family home at 6.8% costs you $2,615/month in principal and interest. Add taxes, insurance, and maintenance. You're at $3,400+ before you've turned a profit. The average Colorado Springs rent for a 3-bedroom is around $1,800-$2,200/month.

That's negative cash flow on day one. Not close. Not barely breakeven. You're writing a check every month.

This is why most investors sat out 2023, 2024, and 2025. The numbers don't work with current rates.

But they work at 2.75%.

That same $400,000 property with an assumed VA loan at 2.75%? Your P&I drops to $1,633/month. Taxes, insurance, maintenance included, you're around $2,400/month total. Now you're in the conversation for cash flow. Or at minimum, not bleeding.

This is why assumable mortgages have become one of the most underused investor tools in Colorado right now.

The Core Math: Why the Rate Changes Everything

Let's do this properly.

Scenario A: Buy with a new conventional loan

• Purchase price: $420,000
• Down payment: $84,000 (20%)
• Loan amount: $336,000 at 6.8%
• Monthly P&I: $2,198
• Property taxes (El Paso County est.): $200/month
• Insurance: $120/month
• Vacancy reserve (8%): $160/month
• Maintenance reserve: $150/month
• Total expenses: $2,828/month
• Average rent (3-bed Colorado Springs): $2,000/month
• Monthly cash flow: -$828

Scenario B: Assume an existing VA loan at 2.75%

• Purchase price: $420,000
• Remaining loan balance: $360,000 at 2.75%
• Equity gap: $60,000 (cover with cash or second mortgage)
• Monthly P&I on assumed loan: $1,471
• Property taxes: $200/month
• Insurance: $120/month
• Vacancy reserve: $160/month
• Maintenance reserve: $150/month
• Total expenses: $2,101/month
• Average rent: $2,000/month
• Monthly cash flow: -$101 (or positive with any rent premium)

That's a $727/month difference. On one property. Per month. Every month for the life of the loan.

Across a 10-property portfolio, you're talking about $7,270/month in additional cash flow compared to buying at current rates.

That's the whole game.

What Makes Colorado Springs Particularly Good for This

Colorado Springs is one of the best markets in the country for investor assumptions. Here's why.

Fort Carson, Peterson Space Force Base, Schriever Space Force Base, and Cheyenne Mountain all sit in or around Colorado Springs. That military concentration meant a massive surge in VA loan originations between 2019 and 2022 when rates were at their lowest.

A lot of those servicemembers are now PCSing. Moving out of state, moving to another base, separating from service. Their homes are coming to market with VA loans attached that carry rates in the 2s and 3s.

For an investor, a departing servicemember's VA loan is the asset. Not the house. The rate.

We personally call listing agents across Colorado Springs, Fountain, Manitou Springs, and surrounding areas to find VA sellers who are willing to let their entitlement stay with the property. We call them hand-raisers. When we find them, it opens the door for investors to assume the loan, because FHA assumptions require owner-occupancy (at least initially), but VA assumptions with entitlement left behind can go to any creditworthy buyer.

Those hand-raiser VA loans are gold for investors.

FHA Assumptions: The Owner-Occupancy Restriction Investors Need to Understand

FHA loans are fully assumable, but there's a catch for investors.

FHA loan assumptions generally require the buyer to intend to occupy the property as their primary residence. This is an FHA requirement, not a lender policy, and it applies regardless of what the seller tells you.

This doesn't mean FHA assumptions are worthless for investors. It means you need to understand the structure:

1. Primary residence first. Some investors buy with FHA assumption intent, occupy briefly, then convert to rental after fulfilling the occupancy requirement. Consult a real estate attorney on the specifics before doing this.

2. VA assumptions are better for investors. VA loans with substituted entitlement (veteran-to-veteran) or with entitlement left behind (for non-veteran/investor buyers) are the cleaner investor play.

3. Target VA inventory. For pure investment purposes, filter specifically for VA loans, not FHA. The Colorado Springs market has substantial VA inventory given the military population.

The Equity Gap: How Investors Structure It

The equity gap is the distance between the home's purchase price and the remaining loan balance. You need to cover this at closing.

For investors, there are a few common structures:

All cash for the gap. The simplest option. You bring the equity gap amount to closing along with your closing costs. Your only ongoing debt is the assumed loan. This maximizes cash flow.

Second mortgage on the gap. Several lenders in Colorado offer second mortgages specifically for assumption gap financing. These typically run 9.5-12% on the gap amount. Your total debt stack is higher, but you preserve capital.

Blend the gap into a second property HELOC. If you already own a property with equity, a HELOC on that property can fund the gap. You keep cash liquid and often get a better rate on the HELOC than a second mortgage.

Seller financing on the gap. In some cases, sellers will carry the equity gap as a note. Less common, but worth asking about, especially if the seller is PCSing and doesn't need a lump sum.

The gap math matters a lot. A $40,000 gap financed at 10% adds $333/month to your carry cost. A $120,000 gap at the same rate adds $1,000/month. Run the full stack before making an offer.

Finding Assumable Investment Properties in Colorado

Most real estate platforms don't filter by assumable loans. You have to know how to look.

What we do:

1. Search by loan type. When VA or FHA loan type is disclosed in the MLS, that's a signal. Not all listings disclose it, but many do.

2. Filter by origination date. Loans originated 2019-2022 are the target window. Rates were lowest then. You can often get origination date from public records or from asking the listing agent.

3. Target military PCS patterns. Summer months and January see the highest PCS volume. That's when VA loan inventory spikes in Colorado Springs. Set your search alerts for those periods.

4. Call listing agents directly. The best assumable inventory never gets publicly labeled as such. We call agents to find VA sellers who are open to leaving entitlement with the property. This is manual work that most investors skip, which is why most investors miss the best deals.

5. Work with someone who does this every day. There's a reason our clients access deals that aren't on Zillow. We maintain a proprietary list of assumable properties across Colorado's Front Range that gets updated constantly.

The Timeline: What Investors Need to Plan For

Mortgage assumptions take longer than traditional closings. Plan for 45-90 days. Some take longer if the lender's assumption department is backed up.

For investors, this creates a few considerations:

Earnest money is at risk longer. Make sure your contract has clear contingencies and timelines. Work with an agent who knows how to structure assumption contracts.

Don't give possession until the assumption is fully approved. The lender approves the assumption, not the buyer's verbal commitment. Until that approval comes through, the seller is still on the hook for the mortgage.

Lender matters enormously. Some lenders process assumptions in 30 days. Others take 90+. We know which servicers move fast and which ones drag. This affects your hold costs and your overall deal math.

Parallel-process your inspections. Get inspections done early in the assumption period, not at the end. This lets you negotiate repairs while the lender is processing the assumption, rather than stacking delays.

What Kind of Returns Are Actually Realistic

Let's put real numbers on this.

Deal example: Fountain, CO (near Fort Carson)

• Single-family, 3 bed/2 bath
• Purchase price: $390,000
• VA loan balance assumed: $345,000 at 2.65%
• Equity gap: $45,000 (covered with cash)
• Monthly P&I on assumed loan: $1,396
• Taxes + insurance + reserves: $640/month
• Total carry: $2,036/month
• Market rent: $2,100/month
• Monthly cash flow: +$64/month (before mortgage paydown and appreciation)

Not rich. But cash flow positive on a $390,000 property with $45,000 down (11.5% down). With current rates, that same deal would require 20% down ($78,000) and would still run $700/month negative.

The math on appreciation is separate. Colorado Springs has appreciated roughly 7% annually over the last decade despite rate headwinds. On a $390,000 asset, that's $27,300/year in equity growth. Combined with $1,396/month in mortgage paydown by tenants, you're building wealth on someone else's dime, you just need to survive cash flow neutral while it happens.

Assumable loans make that survivable.

House Hacking With an Assumable: The Power Move

If you're an investor who also needs a place to live, the house hack with an assumable FHA loan is one of the best moves available right now.

FHA assumptions are owner-occupied, which is the house hack setup. You buy a property, live in one unit (or one bedroom), rent the other units or rooms, and let the rent cover your payment.

At 2.75% instead of 6.8%, the rent-to-payment ratio snaps back into the house hacking sweet spot. Ryan did this repeatedly before rates spiked. He bought his first house hack making $35,000/year as a social worker, converted the garage, rented the bedrooms, and lived for free. When rates tripled, that math broke. Assumable FHA loans bring it back.

The playbook: find a 2-4 unit or large single-family with an FHA loan from 2020-2022. Assume it. Occupy one unit. Rent the rest. Live for free or near it. Build equity. Repeat.

The Investor Assumption Checklist

Before you make an offer on an assumable property as an investor:

• Confirm loan type (VA preferred for investors; FHA requires occupancy plan)
• Get remaining loan balance from the listing agent or public records
• Calculate the equity gap and decide how you're covering it
• Run the full cash flow model (P&I + taxes + insurance + vacancy + maintenance)
• Research the lender's assumption timeline and reputation
• Confirm with a real estate attorney if doing an FHA assumption with rental intent
• Have your earnest money and gap funds ready before going under contract
• Work with an agent who has closed assumptions before, not someone learning on your deal

How We Help Investors Find These Properties

We maintain a curated list of assumable VA and FHA properties across the Colorado Front Range. Updated regularly. Organized by loan balance, interest rate, equity gap, and monthly payment.

We also do the work most investors don't want to: calling listing agents to find VA sellers who are open to leaving entitlement. That means investors can assume VA loans without being veterans. That expands the inventory significantly.

If you're an investor trying to make Colorado rental properties work in this rate environment, the assumptions list is the first thing you should see.

Book a free 15-minute consultation and we'll show you what's currently on the list, run the cash flow on any property you're looking at, and explain exactly how the assumption process works for investors.

The rate is the asset. And right now, the asset is available.

Ryan Thomson is a licensed Colorado real estate agent and the founder of The Assumable Guy. He has closed assumption deals across Colorado's Front Range and specializes exclusively in helping buyers and investors access below-market rates through VA and FHA loan assumptions.