Mortgage Takeovers: How to Take Over a Seller's Low Rate (FHA, VA, USDA)

If the seller locked a much lower rate than today's, taking over their loan can mean a noticeably lower monthly payment than a brand-new mortgage. It's like inheriting a coupon from the past. A very valuable coupon.

• FHA loans: generally assumable with lender approval of the buyer.
• VA loans: assumable by any creditworthy buyer (you don't need to be a veteran), with lender and VA rules, including residual income.
• USDA loans: assumable with USDA approval and eligibility rules.
• Conventional loans: usually not assumable because of the due-on-sale clause.

You take over the balance, not the price. If the home is $400,000 and the loan balance is $280,000, you need $120,000 for the seller's equity, from savings or a second loan (if the lender allows it).

On Boraak, mortgage takeover listings show the loan balance, rate, monthly payment, loan type and the cash to take over, so you can do this math in seconds.

1. Find a listing marked Mortgage Takeover and confirm the loan type.
2. Agree on price and terms using a normal contract, with an assumption addendum.
3. Apply with the seller's loan servicer; they review credit, income and debts.
4. Pay the assumption fees (FHA has a capped processing fee; VA charges a funding fee on the assumed balance).
5. Close at a title company. Get the seller released from liability in writing.

Assumptions can take longer than a new loan, so plan the timeline with room to spare.

If a non-veteran assumes your VA loan, part of your VA entitlement can stay tied to that loan until it's paid off, which can affect your next VA purchase. If the buyer is a veteran who substitutes their entitlement, yours can be restored. Ask your servicer before you agree.