What to know about assumable mortgages as rates stay above 7%
By Google News Personal Finance ·
Elevated rates have made assumable mortgages more appealing. But there aren’t many available — and many consumers aren’t aware that the option even exists.
With elevated mortgage rates pricing so many potential homebuyers out of today's housing market, it seems like assumable mortgages should be a hot topic within the industry. But that's not the case — partly due to the challenges involved with assumable mortgages, but also because many consumers aren't aware that the option exists.
A buyer who opts for an assumable mortgage instead of securing a new one takes over a homeseller's loan at the rate that seller negotiated. This could be beneficial for buyers who can't afford 30-year rates today — particularly if they assume a loan that originated during the Covid-19 pandemic at an ultra-low rate.
Current elevated rates stand in contrast with the comparatively lower rates consumers were used to for many years. The 30-year fixed-rate mortgage stayed below 6% between late 2008 and 2019 and dropped even further — into the 3% range — during the pandemic, according to Freddie Mac data.
"If rates are low for long enough, then you just become accustomed to the way that you're doing business and you don't have to think about that," Andy Taylor, who co-founded RetroRate in 2025, said in a recent interview with Real Estate News.
But rates have climbed since the pandemic, and many homeowners who may be interested in moving don't want to give up the low rates they secured in the early 2020s. According to a National Bureau of Economic Research paper published in 2024, rising rates in 2022 and 2023 are estimated to have cut mobility by 16% for households with mortgages and resulted in $20 billion of "deadweight loss."
This trend is further evidenced by Realtor.com data, which suggests that nearly half of all current mortgages have rates of 4% or lower.
Another reason many consumers don't hear much about assumable mortgages is because a handful of challenges are involved with securing them, including:
Few loans qualify: Typically, only government-backed loans — like FHAs or VAs, which make up about 1 in 10 loans — are assumable.
Further complications for VA loans: If a VA loan is assumed by a nonveteran buyer, the seller risks leaving their entitlement tied up.
Bigger down payment needed: A buyer who opts for an assumable mortgage usually must come up with a large down payment so that they can pay the gap between the home's sale price and the seller's remaining loan balance. For example, if a seller listed their home for $500,000 and still owed $200,000, the buyer would need a $300,000 down payment.
Even with these drawbacks, assumable loans can result in significant buyer savings. Still, the total number of mortgage assumptions remains small, according to the Bipartisan Policy Center.
While the elevated rates of recent years have increased consumer awareness about assumable mortgages, Taylor said he still comes across real estate agents who aren't mindful of the option.
RetroRate, which was initially founded to focus on helping individual agents, is now finding that it can better spread that awareness by working with multiple listing services to add an assumable loan category option to home listings. In this low-demand environment, Taylor said having a seller flag that a buyer could take over their loan may help draw interest.
The company's recently created Assumable Atlas tool, which tracks how many assumable loans are available…
Originally published by Google News Personal Finance
