Last updated: October 23, 2026
Short answer: An assumable mortgage lets you take over the seller's existing home loan, including its interest rate and remaining term. FHA and VA loans can be assumed if the lender approves you, but you must cover the gap between the price and the loan balance. Ask us about assumable listings in our Avondale home search.
Key takeaways
- HUD says all FHA-insured mortgages are assumable, but for loans closed on or after December 15, 1989, you must qualify and live in the home.
- VA loans are assumable too. The VA funding fee on an assumption is 0.5%, and you don't have to be a Veteran to assume one.
- Freddie Mac's average 30-year fixed rate was 7.32% on October 22, 2026, so an older, lower rate can mean a much smaller payment.
- The catch is the gap: the difference between the price and the loan balance has to come from your cash or a second loan.
¡Qué tal! I'm Rosie Armenta. Lately, almost every buyer who sits down with Mariela and me asks some version of the same question: "Is there any way to get a lower rate?" One of the best-kept secrets in this market is the assumable mortgage. It isn't for everyone, and it takes patience, but when it fits, it can save a family hundreds of dollars a month. Here's how it really works in Arizona.
What is an assumable mortgage?
The Consumer Financial Protection Bureau (CFPB) explains it simply: in a loan assumption, the buyer takes over the remaining balance on the seller's mortgage, on the original loan terms, like the interest rate and the remaining length of the loan. The difference between the sale price and the loan balance is what you pay, either out of pocket or with another loan. To take over the mortgage, you have to qualify, usually with a review of your credit and income, much like a new loan.
That's why assumptions get so much attention when new rates are higher than the rates sellers locked in a few years ago.
Which loans can be assumed?
| Loan type | Can a buyer assume it? | What the official rules say |
|---|---|---|
| FHA | Yes, with lender approval | HUD: "All FHA-insured Mortgages are assumable." For loans closed on or after Dec. 15, 1989, the buyer must pass a credit review and occupy the home as a primary residence (or HUD-approved secondary residence). |
| VA | Yes, with lender approval | The loan must be current and the buyer must be creditworthy under VA standards. The buyer doesn't have to be a Veteran. Funding fee: 0.5% of the loan. |
| Conventional | Usually not | Most conventional loans can't be taken over by a new buyer. The seller's loan documents and lender give the final answer. |
Sources: HUD Handbook 4000.1; VA Circular 26-23-10 and VA.gov funding fee page; CFPB. Checked October 23, 2026.
How much could I save by assuming a loan?
Here's a worked example. The seller's loan details are made up for illustration, and real loans will differ. The new-loan rate is Freddie Mac's weekly average, and your own rate depends on your credit, loan type and down payment.
| Assume the seller's loan | Get a new loan | |
|---|---|---|
| Price | $420,000 | $420,000 |
| Loan | $300,000 balance at an example 3.5%, 25 years left | $399,000 (5% down) at 7.32%, 30 years |
| Cash for the price | $120,000 gap | $21,000 down payment |
| Principal and interest | about $1,502 a month | about $2,741 a month |
Price is close to the 85392 median sale price of $419,877 (Redfin market data, three months ending September 2026). Rate: Freddie Mac PMMS, October 22, 2026. Taxes, insurance and HOA dues are extra in both cases. My math.
That's roughly $1,239 a month less in this example. But look at the cash line. The $120,000 gap is the reason many assumptions never happen. Some buyers cover it with savings or the sale of a home, and some use a second loan, which adds its own payment. We always run both paths side by side before you write an offer.
How do I assume an FHA or VA loan?
- Find a home with an FHA or VA loan. Sellers and listing agents can tell you the loan type. We can ask before you fall in love with a house.
- Confirm the balance, rate and servicer. The seller's mortgage statement shows who services the loan. Only that servicer can process the assumption.
- Write the offer with the assumption in mind. The contract should give enough time for the servicer's approval and say how the gap will be paid.
- Apply with the servicer. You'll provide income, asset and credit documents, much like a new loan. HUD requires FHA assumptions to be manually underwritten.
- Wait for approval and close. VA's 2023 circular gives servicers with automatic authority 45 days to decide on a complete application. At closing, the seller should receive a release of liability.
What does it cost to assume a mortgage?
- FHA: HUD lets the servicer charge a processing fee that is "reasonable and customary" up to $1,800, plus actual costs like a credit report.
- VA: The VA funding fee on an assumption is 0.5% of the loan balance, so about $1,500 on a $300,000 balance. VA caps the servicer's processing fee at $300 (Circular 26-23-10, Change 1), though VA later allowed some added local fees, so ask the servicer for its full fee list.
- Normal closing costs still apply, like title, escrow and HOA fees. Here's my guide to buyer closing costs in Arizona.
Do I have to be a Veteran to assume a VA loan?
No. VA rules require the loan to be current and the buyer to be creditworthy, not to be a Veteran. But this matters a lot to the seller. If the buyer is not an eligible Veteran who substitutes their own entitlement, VA says the seller's entitlement stays tied to the loan until it's paid in full. If you're a Veteran buyer, you may be able to substitute your entitlement so the seller gets theirs back. If you're a Veteran shopping for your own VA loan, read how VA loans work near Luke AFB.
Can I find assumable homes in Avondale?
Yes, but you have to look on purpose. Many buyers use FHA and VA loans, and Avondale is close to Luke Air Force Base, so it's always worth asking about the loan on a home you like. Most listings don't advertise the loan type, so Mariela and I check with listing agents, and we watch for homes where the seller's equity is small enough to make the gap realistic. Start browsing the Avondale home search or use the advanced home search to set your price range, then send us the homes you like and we'll ask about the loan.
Is an assumable mortgage a good idea for me?
It can be a great fit if you have savings or equity to cover the gap, you plan to live in the home, and the seller's rate is far below today's average. It's a weaker fit if the gap is large and the only way to cover it is a high-rate second loan, or if you need to close fast. And if your down payment is small, compare it with a regular loan. My guide on how much down payment you really need in Arizona can help.
Ready to look for a lower rate?
Browse the Avondale home search, then call or text me at 623-295-5770. Mariela and I will check loan types with listing agents and run the numbers both ways with you. Selling a home with a low-rate FHA or VA loan? Its assumability may be a selling point, so start with a free home value report.
Frequently Asked Questions
What is an assumable mortgage?
An assumable mortgage is a home loan that a buyer can take over from the seller, keeping the remaining balance, interest rate and remaining term. The buyer must qualify with the lender and pay the difference between the sale price and the loan balance, in cash or with another loan.
Are FHA loans assumable in Arizona?
Yes. HUD says all FHA-insured mortgages are assumable. For loans closed on or after December 15, 1989, the buyer must pass the lender's credit review and live in the home as a primary residence or a HUD-approved secondary residence.
Can a non-Veteran assume a VA loan?
Yes. VA rules require that the loan be current and the buyer be creditworthy. The buyer doesn't have to be a Veteran. If the buyer doesn't substitute eligible VA entitlement, the seller's entitlement stays tied to the loan until it's paid off.
Are conventional loans assumable?
Usually not. Most conventional loans can't be taken over by a new buyer. Check the seller's loan documents and ask the loan servicer to be sure.
How much does it cost to assume a mortgage?
For FHA loans, HUD allows a processing fee of up to $1,800, plus actual third-party costs like a credit report. For VA loans, the funding fee on an assumption is 0.5% of the loan balance, plus the servicer's processing fee. Normal closing costs like title and escrow still apply.
How long does a loan assumption take?
It depends on the servicer and how quickly documents come in. VA's 2023 circular gives servicers with automatic authority 45 days to decide on a complete application, so plan for a longer escrow than a typical new loan.
Do I need a down payment to assume a mortgage?
You need to cover the difference between the sale price and the loan balance. For example, on a $420,000 home with a $300,000 loan balance, that gap is $120,000, paid in cash or with a second loan.
How do I find assumable homes for sale in Avondale?
Most listings don't show the loan type, so ask the listing agent whether the seller has an FHA or VA loan and what the balance is. We do this for our buyers and run the numbers before you make an offer.
About the authors
Rosie Armenta is a REALTOR® with West USA Realty. She and her daughter, Mariela Armenta, work together as a mother-daughter team. North Avondale (85392) is their home base, and they help buyers and sellers across the West Valley in English and Spanish. Call or text 623-295-5770, or browse the Avondale home search.
Rosie Armenta, REALTOR® | West USA Realty | Equal Housing Opportunity
Figures were checked on October 23, 2026, from HUD Handbook 4000.1, VA Circular 26-23-10, the VA.gov funding fee and closing costs page, the Consumer Financial Protection Bureau, the Freddie Mac Primary Mortgage Market Survey (October 22, 2026), and Redfin market data for ZIP 85392 (three months ending September 2026). The loan example is for illustration only and is not a rate quote or loan offer. Talk with a licensed loan officer about your situation.