Assumable Home Loans
Most mortgage loans are not assumable, but there are a few exceptions. However, in order to assume an existing mortgage loan, it is generally necessary to obtain the written consent from the lender. Lenders will require an application and will evaluate the applicant's credit worthiness before issuing an approval. If a property is transferred without the required approval, the lender may call the loan due and payable.
- FHA Insured Loans - All mortgages executed after December 1, 1986 require that the buyer be creditworthy to assume a seller's mortgage.
- VA Loans - All mortgages executed after March 1, 1988 require that the buyer be creditworthy to assume a seller's mortgage. If a VA Loan is being assumed by a veteran with home loan eligibility, the seller may also request to have their eligibility be re-instated upon completion of the assumption.
- USDA Loans - All USDA 502 mortgages are assumable by a creditworthy buyer, but as a new rate and terms assumption.
- VA Loans dated prior to March 1, 1988 can be transferred without the approval of the lender, and the seller may still be released from liability on the mortgage loan.
- FHA insured loans originated before December 1, 1986 generally contain no restrictions on assumably. Due to the HUD Reform Act of 1989, FHA mortgages, executed between 1986 and 1989 are freely assumable despite any restrictions stated in the mortgage.