With mortgage rates at 7.28%, taking over a seller's 3% loan sounds like a dream. It can be. Here's how it works in the South Denver Metro, how much cash you'll actually need, and how to find homes that have one.
What is an assumable loan? An assumable loan lets a buyer take over the seller's existing mortgage, including its interest rate, instead of getting a new one. In the South Denver Metro, these are mostly FHA and VA loans, some from 2020 and 2021 with rates near 3%. The trade-off: you pay the seller for their equity, which can easily mean six figures at closing, and approval takes longer. Jacob Stark, South Denver Metro REALTOR®, helps buyers find homes with assumable loans and run the real numbers first.
I keep a live search of homes for sale whose listings mention a potential loan assumption. Tell me what you're looking for and I'll send you the list, plus a quick read on how much cash each one would take.
The average 30-year fixed rate hit 7.28% the week of October 1, 2026, the highest since November 2023, according to Freddie Mac. Many homeowners who bought or refinanced in 2020 and 2021 locked in rates around 3%. If their loan is FHA or VA, a buyer may be able to take it over. Nationally, about 23% of active mortgages are assumable, yet only about 6,400 assumptions were completed in 2023, because most buyers hit the challenges below.
When you assume a loan, you take over the seller's remaining balance, not the purchase price. Everything above that balance is the seller's equity, and you have to pay it at closing, either in cash or with a second loan at today's rates.
Example (hypothetical): a $650,000 home. The seller took out a $420,000 FHA loan at 3% in 2021. Five years later, about $373,000 is left, so the gap is about $277,000.
| New loan, 20% down | Assume + second loan | Assume + all cash | |
|---|---|---|---|
| Rate | 7.28% | 3% on $373K + 9% on $147K | 3% on $373K |
| Cash at closing* | $130,000 | $130,000 | $277,000 |
| Monthly principal & interest | $3,558 | $2,951 | $1,771 |
| Savings vs. new loan | — | About $600/mo | About $1,790/mo |
*Before closing costs. Illustration only, not a loan quote. Principal and interest only; excludes taxes, insurance, and mortgage insurance (FHA mortgage insurance carries over with the assumed loan). New-loan rate is the Freddie Mac weekly average for October 1, 2026. The 9% second-loan rate is an assumption for illustration; actual second-loan availability, rates, and limits vary by lender and may not be offered for every assumption. Talk with a lender about your situation.
The takeaway: the bigger the seller's equity, the more cash or second-loan debt you need, and the smaller the savings. The sweet spot is usually a home where the loan balance is a large share of the price.
Only some homes have an FHA or VA loan, and only some of those have a balance, rate, and location that work for you. Asking one home to check every box is a lot. That's why I keep a live search of homes whose listings mention a potential assumption, so you can start with the homes where it's possible and judge them on the things that matter to your family.
Always confirm the details before you write an offer: loan type, current balance, rate, remaining term, and who the servicer is. "Assumable" in a listing is a starting point, not a guarantee.
Get the Assumable Homes List| Loan type | Assumable? | What to know |
|---|---|---|
| FHA | Yes, with servicer approval | You must qualify (credit and income). FHA mortgage insurance stays with the loan. Servicers can charge up to $1,800 to process the assumption. |
| VA | Yes, with servicer approval | You don't have to be a veteran. VA charges a 0.5% funding fee on the balance (some exemptions apply), and servicer processing fees are capped at a few hundred dollars. Sellers should understand the entitlement issue below. |
| USDA | Sometimes | You must meet USDA income limits, and the home must be in an eligible rural area, so they're uncommon in the South Denver Metro. Get the rate and terms in writing. |
| Conventional | Almost never | Most have a due-on-sale clause requiring payoff when the home sells. |
A normal financed purchase in Colorado often closes in about 30 days. Assumptions run through the seller's loan servicer, not your lender, and servicers don't earn much for processing them. Agents commonly report 30 to 60 days or more. VA expects servicers to finish within 45 days, but that deadline is often missed. Build extra time into the contract, and make sure the seller is on board with a longer timeline before you write the offer.
| Pros | Cons |
|---|---|
| A much lower rate on most of the loan | Large cash or second-loan need to cover the seller's equity |
| Lower monthly payment, often by hundreds or more | Few homes qualify, so your choices are narrower |
| Capped processing fees and no new-loan origination costs on the assumed loan | Longer, less predictable approval through the servicer |
| You keep the seller's shorter remaining term, so you build equity faster | Second loans come at higher rates and aren't always available |
| A predictable payment on the assumed portion when it's a fixed-rate loan | FHA mortgage insurance stays with the loan |
Figure out how much you can bring to closing and whether you'd qualify for a second loan. This decides which homes make sense.
Start with homes whose listings mention a potential assumption, then narrow by what your family needs.
Confirm loan type, balance, rate, remaining term, and servicer with the listing agent before you offer.
Include the assumption terms, how you'll cover the equity gap, and a longer closing timeline.
You apply with the seller's servicer, who reviews your credit and income. Stay on top of document requests.
You pay the seller's equity and closing costs, and the loan, at its original rate, becomes yours.
If you're moving up and your current home has an assumable loan, that low rate can be a real selling point when buyers are facing 7.28%. A few things to know first:
Thinking about moving up? See the full plan for families who've outgrown their home.
An assumable mortgage is a home loan a buyer can take over from the seller, keeping the seller's interest rate, remaining balance, and remaining term. In the South Denver Metro, that usually means an FHA or VA loan. The buyer still has to be approved by the loan servicer and pay the seller for their equity.
You need enough to cover the gap between the purchase price and the loan balance, plus closing costs. On a $650,000 home with about $373,000 left on the loan, that gap is roughly $277,000. Buyers cover it with cash, a second loan, or both. Jacob Stark, South Denver Metro REALTOR®, runs this math with buyers before they fall in love with a home.
Yes. A non-veteran can assume a VA loan if the servicer approves them. The catch is on the seller's side: unless the buyer is a veteran who substitutes their own entitlement, the seller's VA entitlement stays tied to that loan until it's paid off, which can limit the seller's next VA purchase.
Plan for longer than a normal purchase. Agents commonly report 30 to 60 days or more for the servicer's approval, and VA expects servicers to finish assumptions within 45 days, a deadline that is often missed. Your contract should allow extra time.
Almost never. Most conventional loans have a due-on-sale clause that requires the loan to be paid off when the home sells. Assumable loans are mainly FHA, VA, and USDA loans.
Not always. If you need a large second loan at a higher rate to cover the seller's equity, the blended payment can land closer to a new loan than you'd expect. Compare total monthly payment and total cash to close side by side before deciding.
Jacob Stark is a REALTOR®, not a lender. Loan rules change; confirm current requirements with your lender and the loan servicer.