How to Buy (Part 1): Assumable Loans

So, you’re dreaming of buying a home, but those sky-high interest rates are making you think twice? You’re not alone, plenty of people are hitting pause, waiting for rates to drop. But what if you could buy a home now without getting crushed by today’s rates? Welcome to the first article in our mini-series on creative, wallet-friendly ways to purchase a home. We’re kicking things off with my favorite: assumable loans. This lesser-known strategy can save you thousands and get you into your dream home without waiting for the Fed to play nice. Let’s break it down with some real examples to guide you.

What’s an Assumable Loan, Anyway?

An assumable loan lets you “take over” someone else’s mortgage, including their interest rate, terms, and balance. Here’s an example: a seller snagged a 3.5% rate back in 2020, and now you get to step into their shoes instead of signing up for today’s 7% rates. Sounds like a no-brainer, right? While not that simple it is a powerful tool if you know how to use it. These loans are most common with government-backed mortgages like FHA, VA, or USDA loans, which often allow assumption under specific conditions.

Why does this matter? According to the Mortgage Bankers Association, the average 30-year fixed-rate mortgage was 6.87% in March 2025 [Mortgage Bankers Association, Weekly Mortgage Applications Survey]. Compare that to a 3%–4% rate from a few years ago, and you’re looking at hundreds of dollars in monthly savings on a $300,000 loan. That’s enough money to open the door to buying that is currently closed to many wanting to buy their first home.

Step 1: Find a Home with an Assumable Loan

Not every home comes with an assumable loan, so you’ll need to do some detective work. Start by teaming up with a real estate agent who knows their stuff. Someone who’s not just chasing commissions but understands creative strategies like this. Ask them to filter listings for properties with FHA, VA, or USDA loans, as these are potentially assumable. Platforms like SettleSavvy can connect you with agents who are pros at spotting these opportunities and won’t waste your time on homes that don’t fit the bill.

You can also check with listing agents directly. Try asking, “Is this mortgage assumable, and what’s the interest rate?” Some sellers advertise their low-rate loans to attract buyers, especially in a high-rate market. Websites like AssumeList.com can point you to properties marketed for assumption, though availability depends on your area. Keep in mind: the home still has to check your boxes: location, size, vibe. So don’t get blinded by a killer rate alone. Like any investment, think about the end game: will this home hold value if you sell later?

Step 2: Qualify for the Assumption

Assuming a loan isn’t as simple as shaking hands and moving in. You’ll need to qualify with the lender, just like you would for a new mortgage. For FHA and USDA loans, this means meeting credit and income requirements, which are often more flexible than conventional loans [HUD, Handbook 4000.1]. VA loans are trickier—if you’re not a veteran, you might need the seller to release their VA entitlement, which some aren’t willing to do [VA, Circular 26-23-15].

Here’s a pro tip: ask the seller or their agent for loan details upfront, like the remaining balance and payment history. If the loan balance is $200,000 but the home’s price is $300,000, you’ll need to cover that $100,000 gap with cash, a second mortgage, or another financing option. A sharp agent will help you crunch these numbers and spot red flags, like a seller who’s underwater on their loan. You can bring a loan current by back paying those missed payments, but not counting that into your cost to acquire could mess up your math. Test your agent’s know-how: ask, “How have you helped clients navigate assumable loans before?” A blank stare is your cue to keep shopping for help.

Step 3: Navigate the Process

Once you find a home and qualify, it’s time to seal the deal. This part can feel like herding cats, so lean on professionals who’ve been there. You’ll need approval from the lender or loan servicer, which can take 30–90 days depending on the loan type [Consumer Financial Protection Bureau, Mortgage Assumption Guide]. Expect paperwork, fees (often $500–$1,500), and maybe an appraisal to confirm the home’s value.

A great agent or mortgage broker will act like your personal quarterback, coordinating with the lender, seller, and title company to keep things on track. Ask for a story: “Tell me about a time an assumption deal hit a snag—how’d you fix it?” Their answer will show if they’re proactive or just along for the ride. If you’re feeling overwhelmed, services like SettleSavvy can match you with experts who specialize in these deals, saving you headaches.

Step 4: Plan for the Long Haul

Assuming a loan isn’t just about snagging a low rate—it’s about making a smart investment. Look at the home with the end in mind: does the neighborhood have growth potential? Are schools, jobs, or amenities nearby? SettleSavvy has the tools to make sure you’re landing in the best neighborhood for you, no matter your timeline.

One catch: assumable loans often have shorter terms left. If the seller’s had their loan for 10 years, you’re assuming a 20-year mortgage, not 30. Run the numbers to ensure the payments fit your budget. According to Freddie Mac, shorter loan terms can mean higher monthly payments but less interest over time [Freddie Mac, Mortgage Basics]. If that’s a stretch, talk to your lender about options like a second mortgage to bridge any gaps.

Assumable loans are like finding a coupon for your dream home. In a market where rates are pinching budgets, they let you lock in yesterday’s low rates and save big. For example, on a $300,000 loan, a 3.5% rate versus 7% could save you $500 a month—that’s $180,000 over 30 years! Plus, you’re not stuck waiting for rates to drop, which could take years [Federal Reserve, Economic Projections, March 2025].

But it’s not a one-size-fits-all fix. You’ll need patience to find the right property, cash to cover any price gaps, and a team to navigate the process. That’s where the right pros come in—agents, lenders, or platforms like SettleSavvy that streamline the hunt. Ask yourself: is the effort worth owning a home now, on your terms? For many, the answer’s a resounding yes.

Assumable loans are just one way to make homebuying more affordable in today’s market. Stay tuned for the next articles in our series, where we’ll explore other strategies like seller financing, lease-to-own deals, and tapping local housing programs. For now, start by talking to an agent who gets assumable loans and isn’t afraid to dig for opportunities. Interview a few, ask tough questions like, “What’s the last assumable deal you closed?” and trust your gut. Want a shortcut? Check out SettleSavvy to find vetted pros who’ll have your back.

Your dream home’s out there, and you don’t have to wait for interest rates to play nice to make it yours. Get curious, get informed, and get moving—you’ve got this.