Did you miss out on securing a mortgage with a rate below 3% during the pandemic? You're not alone, and it might feel like that opportunity is gone forever. But here’s where it gets interesting: there’s a little-known strategy called an assumable mortgage that could turn back the clock on those rock-bottom rates. This approach allows a homebuyer to take over the seller’s existing mortgage—and, crucially, their lower interest rate. It’s a win-win: buyers get a more affordable home, sellers gain a unique selling point that could attract more offers, and the tight housing market gets a much-needed boost in sales. Sounds too good to be true? And this is the part most people miss: about 6 million U.S. homes have assumable mortgages with rates below 5%, according to Assume List, a platform that helps buyers find these properties. But there’s a catch—several, actually.
First, not all mortgages qualify for this transfer, and even when they do, many buyers and sellers are unaware of the option. Second, the process can be time-consuming and often requires a substantial cash down payment. But here’s where it gets controversial: while government-backed loans like VA and FHA mortgages are typically assumable, conventional mortgages usually aren’t. This means the opportunity is often limited to homes owned by veterans or first-time buyers. Yet, even among these groups, awareness is shockingly low. Jerry Devlin, founder of Assume Loans, notes, 'People just weren’t aware they could save tens, sometimes hundreds of thousands of dollars.'
Companies like Assume Loans and Roam are stepping in to bridge this gap, offering platforms where buyers can search for assumable mortgage listings. For instance, a recent search on Roam for homes in Houston, Texas, revealed 433 listings with rates of 3% or lower—far more than the three found on Zillow, which relies on seller self-reporting. But here’s the kicker: mortgage companies have little incentive to make this process easy. By law, they have 45 days to evaluate a buyer’s credit for a transfer, but in reality, it can drag on for months. Why? Because lenders stand to earn more by issuing new loans at today’s higher rates rather than transferring older, lower-rate mortgages.
Take Brendan Burroughs, a food service driver who hit a wall trying to assume a 2.5% mortgage on a Florida home. After months of delays, he turned to Assume Loans, which expedited the process—only to be accused by his mortgage company of charging 'unnecessary fees.' Is this a fair criticism, or a necessary service in a broken system? Weigh in below.
Another hurdle? The skyrocketing home prices since 2020. If a house sold for $500,000 in 2021 and is now priced at $700,000, the buyer must cover the $200,000 difference—often through a hefty down payment. For many, especially first-time buyers, this is a deal-breaker. Laurie Goodman of the Urban Institute points out, 'Young families are the last people who can come up with an extra $200,000 in cash.' But here’s a thought-provoking question: If assumable mortgages are meant to unlock the housing market, why are they so inaccessible to those who need them most?
Despite these challenges, some buyers are still willing to jump through hoops for a low rate. Charles Johnson, a real estate agent, used an assumable mortgage to buy a Minneapolis duplex at under 3% interest—a deal he wouldn’t have gotten otherwise. But he rarely recommends this route to clients, calling it 'too narrow' an option. Michael Lorino of Assume List disagrees, arguing that demand is sky-high among buyers who can make it work. So, is this a niche solution or a game-changer? Let us know your thoughts.
Proponents like Bharat Ramamurti, former deputy director of the White House National Economic Council, argue that making more mortgages assumable—or even 'portable,' where sellers can take their low rates to new homes—could ease the housing gridlock. But critics like Goodman remain skeptical, citing the down payment barrier. What do you think? Could assumable mortgages be the key to a more affordable housing market, or are they just another hurdle for buyers? Share your perspective in the comments.
