Would Making Mortgages Assumable Help or Hurt the Real Estate Market?

With mortgage rates still hovering near multi-decade highs in 2025, homeowners and homebuyers alike are looking for ways to bring some relief to a tight and expensive housing market. One idea gaining more attention? Expanding the use of assumable mortgages. But would that help — or hurt — the market overall?

Let’s dig into it.

🔄 What Is an Assumable Mortgage?

An assumable mortgage allows a homebuyer to “assume” the seller’s existing mortgage — including its interest rate and remaining balance — rather than taking out a new loan. Currently, only certain government-backed loans (like FHA, VA, or USDA) are assumable under specific conditions.

The concept isn’t new, but with today’s 6–7% mortgage rates and many existing loans locked in under 4%, more buyers and sellers are starting to ask: Why aren’t more mortgages assumable?

✅ How Assumable Mortgages Could Help the Market

1. They Improve Affordability for Buyers

If a buyer can take over a 3% mortgage instead of applying for a new one at 6.5%, the monthly savings could be hundreds of dollars — and the total cost of homeownership drops dramatically. This could open the door for many who are currently priced out.

2. They Give Sellers a Competitive Advantage

Homeowners trying to sell in a high-rate environment could advertise their low-rate assumable loan as a huge perk — something that might help move their home faster and possibly command a higher price.

3. They Could Stimulate More Market Activity

Right now, many homeowners are “rate locked” — stuck in place because they don’t want to give up their ultra-low mortgage for a much higher one. Assumable loans might loosen that freeze and encourage more movement.

❌ But There Are Potential Downsides

1. Lenders Might Push Back

Mortgage servicers make money from originating new loans and refinances. If assumable mortgages become widespread, lenders could lose a significant source of revenue — which may make them reluctant to support this shift.

2. Not Everyone Will Qualify

Buyers still need to qualify to assume the mortgage. And since they have to pay the seller the difference between the loan balance and the home’s purchase price, they might need a large cash payment or a second loan — not always easy.

3. Could Create Inequity

Homes with assumable loans could be in higher demand than those without — potentially skewing the market and creating pressure on sellers whose mortgages don’t qualify.

🧠 Final Take: A Tool Worth Expanding?

While there are obstacles, making mortgages more broadly assumable could be a game-changer in today’s real estate market. It could ease affordability for buyers, unlock inventory from reluctant sellers, and bring some much-needed flexibility.

It’s not a magic fix, but in a housing climate defined by high rates, low supply, and affordability concerns — assumable mortgages could be part of the solution.

Thinking of buying or selling and want to explore options like assumable loans? Let’s talk. You may have more tools at your disposal than you think.

FAQs

Q: What is an assumable mortgage?

A: An assumable mortgage is a type of home loan that allows the buyer to take over (or "assume") the seller’s existing mortgage, including its interest rate and remaining balance.

Q: Are all mortgages assumable?

A: No. Only certain types of loans — mainly FHA, VA, and USDA loans — are typically assumable, and even then, the buyer must meet specific lender qualifications.

Q: Why are assumable mortgages getting more attention in 2025?

A: Because interest rates have risen significantly in recent years. Buyers are looking for ways to lock in lower monthly payments, and sellers want to attract interest by offering their low-rate mortgages as part of the deal.

Q: What are the benefits of assumable mortgages for buyers?

A: Buyers may be able to assume a lower interest rate than current market rates, which can save them hundreds of dollars per month on their mortgage.

Q: How does an assumable mortgage help a seller?

A: Sellers with low-rate loans may have a competitive advantage because buyers are often more interested in homes that offer an assumable mortgage — especially in high-rate markets.

Q: Are there any downsides to assumable mortgages?

A: Yes. Buyers still need to qualify with the lender and may need to make a large upfront payment (or take out a second loan) to cover the difference between the home's price and the mortgage balance.

Q: Could assumable mortgages hurt the market?

A: Possibly. If only certain homes offer assumable loans, it could create an uneven playing field. Plus, mortgage lenders might push back, since they make money from originating new loans.

Q: How do I find out if a home’s mortgage is assumable?

A: Ask your real estate agent or the seller directly. You can also check the loan type on the mortgage — FHA, VA, and USDA loans are the most commonly assumable.

Q: Should I prioritize finding a home with an assumable mortgage?

A: If affordability is a concern and you can qualify, it could be a smart move. It all depends on the price difference, your cash reserves, and how long you plan to stay in the home.