How Much Can You Save with a 2.5% Assumable Rate?

I get asked all the time: "How much would I actually save?" So let me just show you the math. No fluff, just numbers.

We'll compare a 2.5% assumable rate against today's 7% market rate across different loan amounts. These are real scenarios based on actual Colorado listings I'm tracking.

Scenario 1: $300,000 Loan

At 2.5% (25-year remaining term):

Monthly P&I: $1,347

Total interest paid: $104,078

At 7% (new 30-year mortgage):

Monthly P&I: $1,996

Total interest paid: $418,527

Monthly savings: $649

Total savings over the life of the loans: $314,449

That's $7,788 per year back in your pocket. What would you do with an extra $7,800 a year?

Scenario 2: $400,000 Loan

At 2.5% (25-year remaining term):

Monthly P&I: $1,796

Total interest paid: $138,770

At 7% (new 30-year mortgage):

Monthly P&I: $2,661

Total interest paid: $558,036

Monthly savings: $865

Total savings: $419,266

That's not a rounding error. Over $400K in total savings on a single property.

Scenario 3: $500,000 Loan

At 2.5% (25-year remaining term):

Monthly P&I: $2,245

Total interest paid: $173,463

At 7% (new 30-year mortgage):

Monthly P&I: $3,327

Total interest paid: $697,544

Monthly savings: $1,082

Total savings: $524,081

Over half a million dollars. On one house. I know it's hard to believe. Run the numbers yourself.

The Rate Gap Matters More Than the Price

Here's something people miss: the savings aren't just about the home price. It's the gap between the assumable rate and today's rate.

At today's ~7%, every percentage point lower saves you roughly $65/month per $100K of loan. So:

• 2.5% vs 7% = 4.5 points = ~$292/month per $100K
• 3.0% vs 7% = 4 points = ~$260/month per $100K
• 3.5% vs 7% = 3.5 points = ~$228/month per $100K
• 4.0% vs 7% = 3 points = ~$195/month per $100K

Even a 4% assumable rate saves you almost $200/month per $100K of loan. On a $400K loan, that's $780/month.

But Wait, There's More (The Hidden Savings)

Monthly payment savings are the headline number. But there are other financial benefits:

1. Shorter payoff. Assumable loans have less than 30 years remaining. If there's 25 years left, you own the home outright 5 years sooner than a new 30-year mortgage. That's 5 fewer years of payments.

2. More principal from day one. On a 2.5% loan, about 62% of your first payment goes to principal. On a 7% loan, only about 30% goes to principal. You build equity faster with the lower rate.

3. Lower closing costs. No origination fees, often no appraisal. Save $5,000-$10,000 on closing costs compared to a new mortgage.

4. Thousands in interest already paid. The seller has been paying down the loan for 4-5 years. You're not starting from zero on the amortization table.

What About the Equity Gap?

Fair point. You need to cover the gap between the purchase price and the remaining balance. But even when you factor in a second mortgage for the gap, the total cost is dramatically less than a new mortgage at 7%.

I covered this in detail in my equity gap article, but the short version: a second mortgage on the gap at 9% for 15 years still results in a blended monthly payment that's $300-$600 less than a single new mortgage at 7%.

And once the second mortgage is paid off, your payment drops to just the assumed loan amount. That's when things get really sweet.

Real Colorado Examples

From our current listings:

Aurora townhouse: $355K, 2.9% rate, saves $833/month vs 7% market rate.

Colorado Springs single family: $450K, 2.625% rate, saves $1,055/month.

Fort Lupton 4-bed: $460K, 3.25% rate, saves $789/month.

These are real listings, real rates, real savings. Not theoretical. Not "up to." Actual math on actual properties.

The Savings Compound Over Time

Here's the thing about saving $900/month: if you invest that savings at even a conservative 7% annual return, after 25 years you'd have over $740,000.

Read that again. The monthly savings alone, invested, could be worth three-quarters of a million dollars over the loan term. That's generational wealth from one smart housing decision.

This is why I'm all in on assumable mortgages. The numbers don't lie. And the opportunity is sitting there for anyone who knows about it.