FHA Loan Volume and Assumable Inventory
FHA loans account for roughly 35% of Colorado's assumable inventory. While VA loans get most of the attention (lower rates, military connection), FHA assumptions are a significant and sometimes overlooked opportunity.
FHA Origination Context
FHA has been one of the most popular loan programs for decades, especially among first-time buyers. The 3.5% down payment requirement makes it accessible, and during 2020-2022, FHA rates were in the 2.5-3.5% range.
Nationally, FHA insures approximately 7.5 million active mortgages. In Colorado, FHA loans are concentrated in:
- Denver metro (high first-time buyer population)
- Pueblo (affordable price points attract FHA borrowers)
- Colorado Springs (mixed VA and FHA)
- Northern Colorado communities
FHA vs VA in the Assumable Market
| Factor | FHA Assumptions | VA Assumptions | |--------|----------------|----------------| | Share of CO inventory | ~35% | ~60% | | Average rate | ~3.3% | ~2.9% | | Credit requirement | 580+ | 620+ | | Entitlement issues | None | Yes (for non-vet buyers) | | MIP | Yes (ongoing) | No (VA funding fee is one-time) | | Seller concerns | Minimal | Entitlement worry |
FHA assumptions have some distinct advantages:
Lower credit threshold. A 580 minimum vs 620 for VA opens the door to more buyers.
No entitlement complications. The seller loses nothing when their FHA loan is assumed. This makes sellers more willing to accept assumption offers.
Simpler process. Without the entitlement variable, the assumption negotiation is more straightforward.
The tradeoff is that FHA rates from the low-rate era tend to be slightly higher than VA rates (3.0-3.5% vs 2.0-3.0%) and FHA loans carry ongoing mortgage insurance premium.
The MIP Consideration
FHA mortgage insurance premium (MIP) is the main drawback. For most FHA loans originated after 2013, MIP is for the life of the loan at 0.55% of the balance annually.
On a $300,000 balance: $138/month in MIP.
Even with MIP, a 3.0% FHA assumption saves roughly $750/month vs a 7% market rate on the same amount. The MIP cuts into savings but doesn't eliminate them.
Where to Find FHA Assumable Properties
FHA loans are more evenly distributed geographically than VA loans (which cluster near military bases). In Colorado, you'll find FHA assumable properties in virtually every city and suburb.
The highest concentrations tend to be in more affordable areas and first-time buyer neighborhoods. Think starter homes: 3-bed/2-bath single-family homes and townhomes in the $250,000-$400,000 range.
Filter listings to find FHA-eligible properties across Colorado.
Ready to Find an Assumable Mortgage in Colorado?
Browse available listings or schedule a free call with Ryan Thomson, Colorado's leading assumable mortgage specialist.
Browse Homes | Schedule a Call | (719) 624-3472
Frequently Asked Questions
Are all FHA loans assumable?
Yes. Every FHA loan is assumable by law. FHA loans originated after December 1, 1986 require lender approval and credit/income qualification. Loans before that date are freely assumable, though rare.
What credit score do I need to assume an FHA loan?
Most servicers require a minimum 580 credit score for FHA assumptions, though some want 620+. Your debt-to-income ratio should be under 43%.
How long does an FHA assumption take?
FHA assumptions typically take 45-90 days from application to close. The timeline depends on how responsive the servicer is. Having all your documents ready upfront speeds things up.
What are the closing costs on an FHA assumption?
FHA assumption closing costs are lower than a traditional purchase. Expect an assumption fee of $500-$1,000, title insurance, recording fees, and prepaid taxes and insurance. No origination fees or discount points.
Do I need to pay FHA mortgage insurance when I assume the loan?
It depends on the loan date. FHA loans originated before June 2013 may have different MIP terms. Your assumption processor can clarify what MIP obligations transfer with the specific loan.
Can I use down payment assistance with an FHA assumption?
Some down payment assistance programs allow funds to be used for the equity gap in an assumption. Check with your state's housing finance agency for specifics.