Which Loans Are Assumable? FHA, VA, and Conventional Explained
FHA loans and VA loans are assumable by federal law, meaning a buyer can take over the seller's existing loan balance and keep their original interest rate. Conventional loans are not assumable. They include a due-on-sale clause that makes the full balance come due the moment the home changes hands. If you're searching for homes right now and want to know which loans are assumable, the short list is FHA and VA.
The Problem You Keep Running Into
You find a house you like. You run the numbers. The payment doesn't work.
That's the wall most buyers are hitting right now. And most of them keep hitting it because they're only looking at new loans, which means they're getting today's rates on every property they consider.
But some of those sellers locked in their rate years ago, when rates were sitting in the twos. That rate is attached to the loan. And in some cases, you can take that loan over exactly as it sits.
You can change the paint color, the furniture, the landscaping. You can't change the rate on a new loan once it's written. But with an assumable loan, the rate the seller got is the rate you keep, right? That's the whole point.
FHA and VA Loans: What Makes Them Assumable
The assumability on these loans isn't a loophole or a negotiating trick. It's written directly into the loan documents because these are government-backed loans. FHA loans are backed by the Federal Housing Administration. VA loans are backed by the Department of Veterans Affairs. Federal law requires both to include assumability.
Here's what that means in practice:
- FHA loans: Any qualified buyer can assume an FHA loan. The lender reviews your credit and income, you take over the balance, and you keep the seller's rate.
- VA loans: Non-veterans can assume VA loans too. The seller's entitlement stays with the property when the loan is assumed. Learn more about how VA assumptions work.
If you want to go deeper on how assumptions work from start to finish, the complete guide to assumable mortgages walks through the full process.
Conventional Loans: Why They Don't Work the Same Way
Conventional loans have a due-on-sale clause. The entire loan balance becomes due the moment the home is sold. There's no mechanism for a buyer to step into the existing loan. Full stop.
This covers the majority of mortgages in the U.S., which is part of why so many buyers don't even know assumable loans exist. Most people they know bought with conventional financing, so the concept never came up.
| Loan Type | Assumable? | Who Can Assume? | |---|---|---| | FHA | Yes | Qualified buyers | | VA | Yes | Veterans and non-veterans | | Conventional | No | Not applicable |
Why 17% Is a Number Worth Paying Attention To
FHA loans make up 17% of all active mortgages in the country. That's a significant slice of the housing inventory where an assumption is actually on the table.
When Ryan Thomson at The Assumable Guy worked with a buyer recently, that buyer stepped into an FHA loan at 2.99%. At current rates, the same purchase would have cost them close to $300 more every month. That's $3,600 a year. That's a car payment that disappears.
The math only works because the loan was FHA. A conventional loan on that same property would have reset at today's rate and the savings wouldn't exist.
If you want to see what's actually available right now, you can browse assumable homes here.
What This Means If You're Selling
If you have an FHA or VA loan and you're thinking about selling, your loan is an asset, not just a liability to pay off. A buyer who assumes your loan gets your rate. That makes your home more attractive than a comparable property with conventional financing, especially when rates are elevated.
Ryan Thomson at The Assumable Guy works with sellers in Colorado Springs, CO and across the state to position assumable loans correctly from the start. Here's how the seller side works.
Frequently Asked Questions
Which loans are assumable?
FHA loans and VA loans are assumable by federal law. Conventional loans are not assumable because they include a due-on-sale clause that requires the full balance to be paid when the home changes hands.
Can a non-veteran assume a VA loan?
Yes. Non-veterans can assume VA loans. The seller's entitlement stays attached to the property when the assumption closes. The buyer still goes through a qualification process with the lender, but military service is not required to assume a VA loan.
Do I qualify to assume an FHA loan?
You go through a credit and income review with the lender, similar to applying for a new loan. If you qualify, you take over the existing balance and keep the seller's interest rate. The assumability is built into the loan by federal law, not something the seller has to add.
How much can I actually save by assuming a loan?
It depends on the rate the seller locked in and the current rate environment. As one example from Ryan Thomson's work at The Assumable Guy: a buyer who assumed an FHA loan at 2.99% was paying close to $300 less per month than they would have with a new loan at today's rates. Your numbers will vary based on the loan balance and the specific rate you're stepping into.
How do I find homes with assumable loans?
Most buyers never filter for assumable loans, which means they walk past these opportunities without realizing it. You can browse assumable homes at assumableguy.com or find Ryan Thomson on Instagram at @theassumableguy to run the numbers on a specific property.
Find Out What Your Payment Actually Looks Like
If you're buying in Colorado Springs, CO or anywhere in Colorado and you're tired of running numbers that don't work, the problem might not be the house. It might be the loan type you're looking at.
Ryan Thomson at The Assumable Guy, affiliated with Keller Williams Advantage Realty, helps buyers find properties with assumable FHA and VA loans and run the real numbers before making an offer.
Head to assumableguy.com and Ryan will show you what your payment looks like on an actual assumable property.
Ryan Thomson, The Assumable Guy. Equal Housing Opportunity.