How to sell a house with an assumable FHA or VA mortgage
Advertise the loan, accept an offer from a buyer who will take over your mortgage, give the buyer and your servicer what they need for the assumption application, and close once the servicer approves the buyer. The buyer pays you your equity (the price minus the loan balance) at closing, and you should get a release of liability so you're no longer responsible for the loan.
A low assumable rate makes the buyer's monthly payment much lower than with a new loan. That widens the pool of buyers who can afford the home and can support a stronger price, but plan for a longer closing, often 45–90 days.
The steps for a seller
- Check your loan. FHA, VA and USDA loans are assumable with the servicer's approval. Get your current balance, rate and servicer from your latest statement.
- Call your servicer's assumption department. Ask for their assumption package, fees and typical processing time. This tells you how long to allow in the contract.
- Market the loan, not just the house. Put the rate, the loan type and the estimated payment in the listing. List on a site buyers use to find assumable homes, such as AssumptionHub.
- Choose a buyer who can cover the equity gap. Ask how they'll pay the difference between the price and your balance: cash, a second loan, or seller financing from you.
- Sign a contract contingent on assumption approval, with a closing date that matches the servicer's timeline.
- Keep making your payments until closing. The loan has to stay current for the assumption and for your release of liability.
- Close and confirm your release. Get the servicer's written approval of the buyer and your release of liability. See release of liability.
What the seller pays
Your selling costs are much the same as in a normal sale: agent commissions, title and escrow, and any agreed credits. The buyer usually pays the assumption costs: the servicer's processing fee, the credit report and, on VA loans, the 0.5% VA funding fee. Who pays what is negotiable in the contract.
Does an assumable loan help a home sell faster or for more?
It can, but it isn't guaranteed. At today's rates, a buyer who takes over a 2–3% loan can pay several hundred dollars a month less, sometimes over a thousand, than with a new loan. Here is how the payment compares on the same balance:
| Loan balance $400,000 | Assumed at 2.75% (26 yrs left) | New loan at 6.5% (30 yrs) |
|---|---|---|
| Monthly principal + interest | $1,796 | $2,528 |
| Difference | about $730 a month lower with the assumption | |
Taxes, insurance and mortgage insurance are excluded. Illustrative only, not a quote.
That lower payment brings in buyers who couldn't otherwise afford the home, and it's a reason to hold your price instead of cutting it or paying for a rate buydown. The trade-offs are a longer closing and a smaller buyer pool if your equity is large, because the buyer has to cover that gap.
If your loan is a VA loan
If the buyer isn't a veteran who substitutes their entitlement, part of your VA entitlement stays tied to the loan until it's paid off. You can usually still buy again with your remaining entitlement. See what happens to your VA entitlement.
Frequently asked questions
Can I sell my house with an assumable mortgage?
Yes. If you have an FHA, VA or USDA loan, a qualified buyer can take it over with the servicer's approval. You're paid your equity at closing, as in any sale.
Does an assumable mortgage increase home value?
It doesn't change the appraised value, but a low assumable rate lowers the buyer's monthly payment a lot, which can attract more buyers and support a stronger price.
Who pays the fees on a mortgage assumption?
Usually the buyer pays the servicer's assumption fee, the credit report and, for VA loans, the 0.5% funding fee. The seller pays normal selling costs. Everything is negotiable in the contract.
How long does it take to sell with a loan assumption?
Closing usually takes about 45 to 90 days after the contract, because the servicer must review and approve the buyer.
Sell with your low-rate loan
Talk to our team about listing your home with its assumable loan and handling the assumption with your servicer.
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