Six Million U.S. Homes Carry Assumable Mortgages Below 5%. Most Agents Have Never Closed One.

Every FHA and VA mortgage issued in the United States is legally assumable. A buyer can take over the seller’s existing loan – rate, terms, and all – through a federally regulated process that fully transfers both the mortgage and the property rights. With roughly six million of these loans carrying rates below 5%, the math is clear: in a market where prevailing rates sit near 7%, assuming a 2.5% or 3% mortgage would cut a buyer’s interest costs substantially. Yet according to Nora Simpson, head of education at AssumeList, 99% of realtors have never closed an assumable deal. The gap between availability and actual closings comes down to misunderstanding, misaligned incentives, and operational friction.

Most Agents Don’t Know What They’re Selling

The knowledge gap starts at the listing stage. In the metro areas AssumeList covers, roughly 10 to 15% of homes for sale carry VA or FHA mortgages, making them legally assumable. But only 5 to 10% of those listings actually advertise the mortgage’s assumability – its rate, its terms, or the fact that assumption is an option at all.

When a trained buyer’s agent calls a listing agent to discuss assuming a seller’s low-rate mortgage, the most common response, according to Simpson, is blunt: “It’s not assumable.”

That reaction is negative on the law – every VA and FHA mortgage is required to be assumable, and a servicer refusing to process an assumption is in violation of federal regulation. But it reflects how far the industry’s working knowledge lags behind the legal framework.

Servicers Have Little Incentive to Process Assumptions

When a buyer identifies an assumable loan and secures agent representation, the transaction still has to pass through the mortgage servicer – and that is where deals routinely stall. If an assumption fails and the seller sells conventionally, the old low-rate loan gets paid off, freeing capital the lender can redeploy into a 7% mortgage. Same staffing, same operational cost, significantly more revenue.

Simpson describes institutional resistance ranging from passive delay to outright obstruction. Most servicers don’t employ the staff needed to process the volume of assumption applications that are submitted. For example, while it’s easy to apply for a new mortgage and have it approved in less than 30 days, assumption approvals often take much longer. Some realtors who attempt assumptions independently report calling servicers every day for months without getting an intake appointment scheduled. The legal clock governing assumption processing – a 45-day window – does not start until the servicer receives a completed application, giving servicers a structural opening to exhaust the buyer’s patience before the regulatory timeline even begins.

Simpson says AssumeList’s transaction management team routinely gets buyers approved for assumptions within 60 days. She attributes that partly to the company’s willingness to escalate to VA and FHA regulators when servicers stall or refuse to comply with federal regulation.

Asked what rule she would change, Simpson points at the servicers themselves: she would like banks to maintain larger staffs dedicated to processing assumptions. Also, she would like to see federal regulation updated so the required 45-day timeline starts when the buyer begins the assumption application, not when the application is deemed complete by the servicer.

The Equity Gap and the Second Mortgage Problem

Because home values have risen since many of these low-rate loans were originated, buyers might need a second mortgage to cover the difference between the assumed loan balance and the purchase price. Finding lenders willing to write those second mortgages has been its own obstacle. Most lenders prefer primary mortgage originations, where commissions are larger.

Simpson says she interviewed over 50 lenders and cycled through seven preferred lending partners before settling on a team that has been in place for a year and a half. The filtering was not just about rates – it was about customer service and willingness to work within a transaction type that generates smaller commissions. 

Where Assumptions Are Gaining Traction

Markets with large military populations carry disproportionate shares of VA loans and see the most assumption activity. San Antonio stands out: 41% of mortgages there are VA loans, according to Simpson. The Washington, D.C./Maryland/Virginia corridor, major Texas metros, California from Sacramento to San Diego, greater Phoenix, Denver, and the Philadelphia area are all active markets. The state of Washington is beginning to catch up.

AssumeList currently covers 57 metro areas and shows over four million off-market VA and FHA properties on its platform. Texas required a specialized wholesaler for second mortgages legally structured for assumptions in that state – a detail that illustrates how fragmented the lending infrastructure remains even in high-demand markets.

Buyers Without Representation Are Getting Nowhere

A persistent misconception is that a financially sophisticated buyer can navigate the assumption process independently. Simpson recounts the case of a buyer who had downloaded and highlighted FHA handbook documentation – someone she considered exceptionally well-prepared. He attempted to approach listing agents on his own and contacted more than a dozen with active assumable listings, none of whom would engage. One agent interpreted his documentation highlighting the assumption process as a threat of litigation.

The issue is credibility and accountability. A listing agent doesn’t always have a mechanism to verify an unrepresented buyer’s claims. A licensed buyer’s agent, by contrast, carries professional accountability – their career and license are at stake if they misrepresent a transaction or engage in unethical behavior. “I have never seen a buyer successfully close on an assumption without being represented by a very smart, very pro-assumption realtor,” Simpson says.

Why Conventional Loans Aren’t Part of This Conversation

Making conventional loans assumable would require legislative action. Conventional mortgages lost their assumability clauses roughly three decades ago, after the rate spike of the late 1980s and early 1990s drove a wave of assumptions that banks viewed as lost revenue. Lenders responded by removing assumable clauses from conventional loan paperwork – a change that required no act of Congress because those clauses were not federally mandated. VA and FHA loans retained assumability because removing it would have required congressional action, which never came.

The legal infrastructure for VA and FHA assumptions already exists, and Simpson wants the industry’s working knowledge to catch up to it. “I want it not to be a secret,” she says. “I want it to be something that every realtor feels comfortable doing.”

About the Expert: Nora Simpson is head of education at AssumeList, a platform covering FHA and VA assumable mortgage listings across 57 metro areas.

This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.