Homeowners who purchased properties during the pandemic era often secured remarkably low mortgage rates, frequently below 3% – roughly half of current 30-year fixed mortgage averages. For prospective buyers who missed this opportunity, homeownership can seem financially out of reach.
However, there’s a lesser-known strategy that allows buyers to access these historically low rates: assumable mortgages. This financing mechanism enables purchasers to take over the seller’s existing loan terms, including their significantly lower interest rate. The arrangement benefits buyers through reduced costs, provides sellers with a competitive advantage that may attract more offers and higher prices, and helps ease housing market constraints by facilitating additional transactions.
According to Assume List, a company specializing in these transactions, approximately 6 million American homes currently have assumable mortgages with rates below 5%.
However, this option comes with important limitations. Not every mortgage qualifies for transfer, and many homeowners remain unaware of this possibility. Additionally, the process can be lengthy and often requires substantial upfront cash payments.
Limited Awareness Among Homeowners
While conventional mortgages typically cannot be transferred, government-backed loans offer this option. Veterans Affairs (VA) mortgages, commonly held by military veterans, qualify for assumption. Federal Housing Administration (FHA) loans, frequently used by first-time buyers with limited cash reserves, also allow transfers. These government-backed mortgages represented approximately 18% of new loans issued in 2020.
Despite this availability, most homeowners don’t realize they possess transferable mortgages, and potential buyers remain equally uninformed about these opportunities.
Jerry Devlin, who founded Assume Loans to facilitate these transfers, explains that people often miss chances to save tens or even hundreds of thousands of dollars simply due to lack of awareness.
New companies have emerged to address this gap, offering specialized websites where buyers can search for properties with assumable mortgages. Competitor Roam utilizes artificial intelligence to identify these opportunities automatically.
A recent Houston search on Roam revealed 433 listings with assumable mortgages at 3% or lower rates, while Zillow – which depends on seller self-reporting – showed only three comparable properties.
Raunaq Singh, Roam’s founder and CEO, notes that sellers frequently learn about their assumable mortgages for the first time from interested buyers using their platform.
Industry Resistance to Streamlined Processes
Despite potential savings, mortgage transfers remain uncommon, largely due to extended processing times. While federal law requires mortgage servicers to evaluate buyer creditworthiness within 45 days, the actual timeline often stretches for months, according to Craig O’Boyle, president of Assumption Solutions.
The FHA permits servicers to charge up to $1,800 in fees, but these companies can generate significantly more revenue by originating new loans at current higher rates rather than processing transfers at lower rates. O’Boyle suggests that lenders would prefer replacing a 2.5% mortgage with a new 6.5% loan when possible.
Companies like Assumption Solutions help expedite the process for a fee, including ensuring servicers comply with the 45-day evaluation requirement.
Brendan Burroughs, a food service driver, experienced these delays firsthand when attempting to assume a Florida four-bedroom home’s 2.5% mortgage. His mortgage company, Mr. Cooper, informed him that 1,500 people were ahead of him for assistance, requiring an extended wait. After a month of silence, he sought help from Assume Loans and received contact from his servicer within three days.
Mr. Cooper disputed Burroughs’ account, stating that his case followed standard industry timelines and that using Assume Loans resulted in unnecessary fees for services homeowners could complete independently.
Substantial Down Payment Requirements
Another significant challenge stems from the 54% increase in home prices since January 2020. Original mortgages from when housing costs were lower no longer cover current property values, leaving buyers to bridge the gap.
Consider a home that sold for $500,000 in 2021 and now lists for $700,000 – creating a $200,000 difference. This gap widens further when accounting for principal payments made by current owners and their original down payments.
While buyers could seek secondary financing, these loans are difficult to obtain for large amounts and typically carry high interest rates. Most buyers must cover the difference through substantial cash down payments.
Laurie Goodman from the Urban Institute’s Housing Finance Policy Center points out that young families – the intended beneficiaries of starter home availability – are least likely to have an extra $200,000 in cash available.
Burroughs succeeded because early investments in Tesla and Nvidia stock enabled him to make the required $105,000 down payment. His monthly mortgage payment is now half that of a coworker with a similar home, illustrating the potential savings.
Addressing Housing Market Constraints
First-time buyers face a constrained housing market partly because existing homeowners hesitate to sell and upgrade, fearing the loss of their low mortgage rates. U.S. housing turnover rates have reached near 25-year lows.
The Groundwork Collaborative, a progressive think tank, recently proposed making conventional mortgages assumable to address housing market gridlock. They also suggest “portable” mortgages, allowing sellers to transfer their existing low rates to new properties.
Bharat Ramamurti, paper co-author and former White House National Economic Council deputy director, acknowledges that insufficient housing supply drives long-term affordability issues. However, he argues that assumable mortgages could provide short-term relief while new construction catches up.
In November, Federal Home Financing Agency Director Bill Pulte indicated that Fannie Mae and Freddie Mac were exploring assumable and portable mortgage options.
However, Goodman remains skeptical about assumable mortgages’ potential to unlock the housing market, citing the prohibitive down payment barrier for most first-time buyers.
Niche Market with Dedicated Participants
Real estate agent Charles Johnson successfully used an assumable mortgage to purchase a Minneapolis duplex in 2025 at under 3% interest. Despite this success, he rarely mentions the option to clients due to the cash requirements, extended timelines, and limited property selection.
Michael Lorino, founder and CEO of Assume List, reports helping clients complete approximately 40 assumptions over three years while assisting with hundreds of other transfers. He maintains that buyers consistently express interest in money-saving opportunities, creating substantial demand for these specialized transactions despite their complexity.
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