Real Estate Guide

Your Mortgage - Questions and Answers
'Assumable Loans'

• What is an "assumable loan?"
• How do you find out if a loan is assumable?
• Are FHA loans assumable?

What is an assumable loan?

See Definitions for >>

• Assumable Mortgage or Loan.
• Assumption
• Assumption Clause
• Assumption Fee

How do you find out if a loan is assumable?

Look to the loan agreement to determine if it is assumable by someone else. Then talk to the lender about specific requirements based on the value of the home.

Assumable loans permit one borrower to take over a loan from another borrower without any change in the loan terms. Such loans still exist but they aren't very common or popular (for buyers) in a low  interest-rate environment. Plus, today, new assumable loans are almost always adjustable rate mortgages.

Are FHA loans assumable?

Lenders will only permit those FHA loans that have a "subject to transfer" clause to be taken over through a formal assumption process. Look to your loan agreement for specific terms. In addition, you should candidly discuss any risks with your lender, and possibly consult an attorney before signing the final agreement.