Just a few years ago, the U.S. had an indisputably hot seller’s housing market, but rising mortgage rates have turned the tide in favor of buyers. There are now over 500,000 more home sellers than buyers, according to an August 2025 report from Redfin — that’s the widest margin since the real estate platform started collecting these records in 2013.
In many markets, it’s no longer enough for a seller to simply list their property on the market and expect multiple buyers to put in bids over the asking price. Especially in areas where inventory is higher, sellers may need to lure buyers with an added incentive like a record-low mortgage rate through a process known as loan assumption.
The “holy grail” of mortgage assumption is that buyers can essentially bypass today’s high interest rates in favor of a much lower rate, says Greg Fischer, head of growth at RetroRate, a real estate software company that helps agents and their clients find and transact on assumable loans.
Keep reading to learn about the considerations of selling your home with the help of mortgage assumption.
[READ: Compare Current Mortgage Rates]
Do You Have an Assumable Loan?
If you’re a homeowner, you might have an assumable mortgage without even knowing it. Government-backed FHA, VA and USDA loans may be eligible for mortgage assumption. Meanwhile, most conventional loans are not assumable.
According to Federal Housing Finance Agency data, nearly a quarter (23%) of outstanding mortgages are government backed, which translates to more than 11.7 million loans in the U.S. that may be assumable.
Still not sure if your mortgage is assumable? Just reach out to your mortgage lender to ask. You’ll need to get in touch with it to learn about the specific terms and requirements anyway.
What to Consider When Selling Your Home With an Assumable Mortgage
While mortgage assumption is certainly possible, the process comes with its fair share of challenges. That’s one reason assumable mortgages make up only a fraction of mortgage transactions each year.
“While not something every person would be able to navigate, someone with time and expertise could certainly pull this off,” Fischer says.
Here are a few things to consider before including an assumable mortgage in your listing.
An Added Level of Risk: The Buyer Has to Qualify
Just like when you first applied for your current mortgage, the new buyer will need to meet the eligibility requirements to qualify for mortgage assumption. Your lender will look at the buyer’s credit score, debt-to-income ratio and other financial measures as if they were applying for a new loan.
The eligibility criteria can vary by lender and type of loan. For example, FHA loans used to purchase a residence may accept credit scores as low as 500 with a 10% down payment, but the minimum credit score requirement may be as high as 620 for a buyer applying for an FHA loan assumption.
Personal story: My mother-in-law sold her condo with VA loan assumption, luring in buyers with the perk of a sub-3% interest rate. All was going well until the buyer failed to disclose that they were a cosigner on another mortgage and could no longer qualify due to their debt-to-income ratio. It all worked out in the end with a different buyer, but the process took several months to resolve due to these complications.
[See: Current VA Mortgage Rates]
Mortgage Assumption Can Take a Few Months
If time is of the essence when you’re selling your home, then mortgage assumption may not be for you.
Whereas a buyer with a traditional purchase mortgage is expected to close in about a month and a cash offer can close even more quickly, closing with the added complexity of mortgage assumption may take 60 or even 90 days, depending on the lender and the type of loan.
In a bit of reassuring news, though, recent VA guidance mandates that the application must be complete within 45 days, and that covers mortgage assumption.
Buyers May Struggle to Cover the Assumption Gap
Home prices have appreciated rapidly in the past few years, which means that a home is likely worth quite a bit more now than it was when it was last bought and sold. Meanwhile, the homeowner has likely been paying down the principal balance for years, resulting in a much lower loan amount. The buyer needs to cover the gap between the current mortgage amount and the agreed-upon sales price.
Here’s an example: Let’s say the seller bought the home in 2015 for $300,000 with a 20% down payment. The mortgage amount would be $240,000. Over the course of 10 years, they were able to pay the principal balance down to about $190,000.
At the same time, home values rose over the past decade, and the seller is able to sell the property for $400,000. That equates to an assumption gap of $210,000 between the remaining balance of the mortgage and the price of the home.
Many buyers would simply not be able to make up that gap in cash, which means they’d have to acquire secondary financing — like a second mortgage or another type of specialty loan — to bridge the gap. This type of loan would likely come with a higher rate than a traditional purchase mortgage, eating away at some of the interest-rate savings of loan assumption.
[See: 2025 Mortgage Rate Forecast: When Will Rates Go Down?]
Veterans May Temporarily Forfeit Their VA Benefit
Veterans who are selling their home with the help of VA loan assumption should tread carefully. The outcome depends on if the buyer has VA loan eligibility themselves:
— If the assuming buyer is an eligible military service member with remaining VA entitlement, then they can transfer their benefit when they assume the mortgage. That means the seller can use their VA entitlement to purchase another home.
— If the assuming buyer is not an eligible military service member, then the seller’s VA entitlement will remain tied to the property until the buyer sells, refinances or otherwise pays off the loan in its entirety.
Of course, whether it’s a good idea to use mortgage assumption to help sell a home depends on the situation. Don’t just take it from your real estate agent; you’ll want to loop in a trusted contact at your lender, like a loan officer. With such a potentially consequential financial decision on the line, it may also be prudent to get a third-party opinion from a financial advisor, if you have one.
More from U.S. News
2025 Mortgage Rate Forecast: When Will Rates Go Down?
What Is an Assumable Mortgage?
Mortgage Rate Lock-In Gap Shrinks in Every State
Can’t Sell Your Home? See If You Have This ‘Holy Grail’ Mortgage originally appeared on usnews.com
