What Is an Assumable Mortgage?

Short answer

An assumable mortgage is a loan a buyer can take over from the seller, keeping the existing rate, balance and remaining term. HUD states "all FHA insured mortgages are assumable," and VA and USDA loans can be assumed with approval (as of October 2026). Most conventional loans cannot, because of the due-on-sale clause.

Definition

A mortgage whose terms let a qualified buyer step into the seller's place as borrower. The buyer pays the seller the difference between the price and the loan balance.

Worked example

Example only, not a quote: a Broward home sells for $450,000 and the seller's FHA loan balance is $350,000. The buyer assumes the $350,000 at the seller's existing rate and must cover the $100,000 gap. Florida deed doc stamps at $0.70 per $100 are figured on the full $450,000, because the assumed loan counts as consideration: $3,150. If it were a VA loan, the assumption funding fee of 0.5% would be $1,750, paid at closing and not financed.

Which loans can be assumed

• FHA: for loans closed on or after December 15, 1989, the buyer must credit-qualify, and private investors are prohibited from assuming them (HUD Handbook 4155.1). The seller is released only when the lender executes a release of liability.
• VA: the buyer, veteran or not, needs approval from the servicer or VA. Funding fee 0.5% of the balance unless exempt; processing fee up to $300 with automatic authority or $250 when VA must approve (VA Circular 26-23-10).
• USDA: the buyer must assume the entire debt, be an eligible applicant and get Agency approval; the loan can stay on the note's existing rates and terms (USDA HB-1-3555, 17.8).
• Conventional: Fannie Mae's Servicing Guide says fixed-rate loans with a due-on-sale clause are generally not assumable; many ARMs may be. Transfers to a spouse, child or relative who occupies the home, after a death or divorce, or into your living trust are allowed without triggering the clause.

VA entitlement on an assumption

If the buyer is an eligible veteran who will live in the home and has enough entitlement, they can substitute their entitlement and the seller gets theirs restored. If the buyer is not a veteran, the seller's entitlement stays tied to the loan until it is paid in full (VA Circular 26-23-10). Sellers should weigh that before agreeing, since it can limit a future VA loan.

In South Florida

Under F.S. 201.02, deed tax consideration includes the amount of any existing mortgage "whether or not the underlying indebtedness is assumed," so taking over a loan does not shrink the deed stamps. On the note side, F.S. 201.08(5) treats a modification that adds an obligor as a renewal, and F.S. 201.09 only exempts renewals signed by the original obligor. Whether note stamps are owed on your assumption depends on how the documents are drawn, so have the title agent or closing attorney confirm it in writing before closing.