Assumption Clock

Mortgage assumption FAQ

Short, sourced answers to the questions people ask most.

Last reviewed · Sources: official agency guidance and statute

Not legal or financial advice. This guide explains official program rules in plain English. Rules change and every loan is different — confirm details with your servicer, lender or a licensed professional before you act. Assumption Clock is not affiliated with any servicer or government agency.

What is an assumable mortgage?

It's a loan a buyer can take over from the seller, keeping the existing balance, interest rate and remaining term, after the servicer approves the buyer. FHA and VA loans are assumable by rule; USDA guaranteed loans are assumable with USDA approval.

Sources: HUD Handbook 4000.1 · 38 U.S.C. § 3714 · 7 CFR § 3555.256 · Read more: What is an assumable mortgage?

Can I assume a conventional loan?

Usually not. Most conventional loans have a due-on-sale clause, which federal law lets lenders enforce, except for certain family and estate transfers such as to a spouse or children, on death, or in a divorce. Check the Assumption box on the loan's Closing Disclosure.

Sources: 12 U.S.C. § 1701j-3 · CFPB Closing Disclosure

Do I have to be a veteran to assume a VA loan?

No. A buyer who qualifies from a credit standpoint as if they were a veteran can assume a VA loan. But unless an eligible veteran buyer substitutes their own entitlement, the seller's entitlement stays tied to the loan until it's paid off.

Sources: 38 U.S.C. § 3714 · VA Circular 26-23-10 · Read more: VA loan assumptions

How long does a mortgage assumption take?

VA requires servicers with automatic authority to decide within 45 calendar days of a complete application. FHA's handbook sections we reviewed don't set a deadline. Real timelines from first application to closing vary a lot by servicer; see the live leaderboard.

Source: VA Circular 26-23-10 · Read more: Servicer leaderboard

How much does it cost to assume a VA loan?

VA caps the processing fee at $300, plus an assumption locality variance of $386 to $463 depending on region (Texas is in the South region at $404), the 0.5% VA funding fee unless the buyer is exempt, and certain third-party costs like the credit report, recording and title. Fees not listed by VA can't be charged to the buyer.

Sources: Circular 26-23-10 Change 1 · VA Circular 26-24-5 · 38 U.S.C. § 3729

How much does it cost to assume an FHA loan?

FHA lets servicers charge a reasonable and customary processing fee of up to $1,800, plus actual third-party costs such as credit reports and verifications of employment.

Sources: HUD Handbook 4000.1 · FHA INFO 2024-30 · Read more: FHA loan assumptions

Can an investor assume an FHA loan?

Generally no. For FHA loans closed on or after December 15, 1989, the buyer must occupy the home as a principal residence or a HUD-approved secondary residence. Only older loans can be assumed as an investment property, at up to 75% loan-to-value.

Source: HUD Handbook 4000.1

Is the seller released from liability?

On FHA loans the servicer must prepare form HUD-92210.1 to release the seller. On VA loans the seller is released from liability to VA when the assumption is approved. On USDA guaranteed loans, the regulation says the seller remains personally liable.

Sources: HUD Handbook 4000.1 · 38 U.S.C. § 3714 · 7 CFR § 3555.256

Can the VA funding fee be rolled into the loan on an assumption?

VA's assumption circular says the 0.5% funding fee must be collected at closing and may not be financed into the loan balance. Veterans receiving VA disability compensation and certain others are exempt.

Sources: VA Circular 26-23-10 · 38 U.S.C. § 3729

How do buyers cover the seller's equity?

With cash, or sometimes a second loan behind the assumed mortgage. VA allows a junior lien on an assumption if it is subordinate to the VA loan and gives the buyer no cash back. Rules for other programs vary, so ask the servicer in writing.

Source: VA Circular 26-24-17 · Read more: Covering the equity gap

What if the VA servicer denies the assumption?

The seller or the buyer can appeal the servicer's decision to VA within 30 calendar days.

Source: VA Circular 26-23-10

I inherited a house with a mortgage. Do I have to qualify to take over the loan?

Not necessarily. The CFPB says that if you already have title to the house, its rules don't require the lender or servicer to determine your ability to repay before letting you take over the loan. For FHA loans, a transfer by inheritance can be processed without a credit review if you've made the payments for at least six months.

Sources: CFPB: inherited home · HUD Handbook 4000.1

Sources

  1. VA Circular 26-23-10, VA Assumption Updates (May 22, 2023) — U.S. Department of Veterans Affairs
  2. VA Circular 26-23-10, Change 1 — VA Assumption Updates: fees chargeable to the assumer (Feb. 23, 2024) — U.S. Department of Veterans Affairs
  3. VA Circular 26-24-5, VA Assumption Locality Variance (Feb. 26, 2024), with Exhibit A — U.S. Department of Veterans Affairs
  4. VA Circular 26-24-17 — Secondary Borrowing Requirements on Assumption Transactions (Aug. 2024) — U.S. Department of Veterans Affairs
  5. 38 U.S.C. § 3714 — Assumptions; release from liability — U.S. Code (GovInfo, U.S. Government Publishing Office)
  6. 38 U.S.C. § 3729 — Loan fee (VA funding fee table and waivers) — U.S. Code (GovInfo, U.S. Government Publishing Office)
  7. HUD Single Family Housing Policy Handbook 4000.1 — II.A.8.n Assumptions and III.A.3.b Assumptions (servicing) — U.S. Department of Housing and Urban Development
  8. FHA INFO 2024-30 — Handbook 4000.1 update raising the assumption processing fee cap to $1,800 — U.S. Department of Housing and Urban Development
  9. 7 CFR § 3555.256 — Transfer and assumptions (USDA Single Family Housing Guaranteed Loan Program) — eCFR / USDA Rural Development
  10. 12 U.S.C. § 1701j-3 — Preemption of due-on-sale prohibitions (Garn-St Germain Act) — U.S. Code (GovInfo, U.S. Government Publishing Office)
  11. CFPB sample Closing Disclosure — “Loan Disclosures: Assumption” section — Consumer Financial Protection Bureau
  12. CFPB — I recently inherited a house. Is the lender required to determine my ability to repay before I take over the loan? — Consumer Financial Protection Bureau

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