Assumable Mortgages: FHA, VA, USDA and Conventional Rules
Which home loans a buyer can take over, rate and all, and what FHA, VA, USDA and conventional rules require of the buyer and the seller.
Every item cites an official source (HUD, VA, USDA or U.S. Code) and the date we checked it. Last checked Nov 9, 2026.
Official, in effect Quick comparison
| Loan type | Assumable? | Key rule |
|---|---|---|
| FHA | Yes, all FHA-insured loans | Buyer is underwritten; must live there if the loan closed on or after Dec 15, 1989 |
| VA | Yes, with approval | Loan must be current and the buyer must qualify on credit; 0.5% funding fee |
| USDA guaranteed | Yes, with Agency approval | Buyer must meet USDA eligibility; seller stays personally liable |
| Conventional | Usually no | Most have a due-on-sale clause; federal law protects some family transfers |
Sources: HUD Handbook 4000.1 · 38 U.S.C. § 3714 · VA.gov: Funding fee · 7 CFR 3555.256 · 12 U.S.C. § 1701j-3 · Checked Nov 9, 2026
Official, in effect FHA
HUD says all FHA-insured mortgages are assumable, and the lender can't add new limits on assumptions after closing except where HUD rules allow. If the original loan closed on or after December 15, 1989, the buyer must plan to live there as a principal residence (or a HUD-approved secondary residence). Investors can assume only older loans, and then only up to 75% loan-to-value.
The buyer is underwritten by hand by the servicer's underwriter (no automated scorecard). The buyer doesn't need a cash down payment and can take over 100% of the remaining balance. The servicer can charge a processing fee of up to $1,800, plus actual third-party costs such as a credit report. To get the seller released from the loan, the servicer prepares HUD form 92210.1.
A transfer by inheritance, or some divorce transfers where the person keeping the home stays on title and lives there, can be processed without a credit review if that person shows they've made the payments for at least six months.
Source: HUD Handbook 4000.1 (Update 18, Aug 12, 2026): Assumptions · HUD: Handbook 4000.1 information page · Checked Nov 9, 2026
Official, in effect VA
Under federal law, a VA loan can be assumed if the seller notifies the lender in writing before the sale, the loan is current, and the buyer agrees to take on the full loan and qualifies on credit as if they were applying for a VA loan. The buyer doesn't have to be a Veteran. If the holder says no, the seller can appeal to VA. Sell without telling the lender and the lender can demand full payment.
The VA funding fee for a loan assumption is 0.5%.
Sellers, watch your entitlement. VA restores the entitlement you used only if the loan is paid off, or if a qualified Veteran buyer assumes the loan and substitutes their own entitlement. An assumption by a non-Veteran doesn't restore it.
Sources: 38 U.S.C. § 3714 · VA.gov: Funding fee and closing costs · VA.gov: Eligibility (restoration of entitlement) · Checked Nov 9, 2026
Official, in effect USDA guaranteed
The lender must get USDA approval before agreeing to an assumption. The buyer must take on the whole debt and meet USDA's eligibility rules, the home must meet USDA's property standards, and a new guarantee fee is charged on the remaining balance. The interest rate can't go above the original loan's rate. The seller remains personally liable.
Some transfers don't trigger the due-on-sale clause, such as a transfer to a spouse or children, a transfer to a relative after the borrower's death, or a transfer to a spouse in a divorce.
Source: 7 CFR 3555.256, Transfer and assumptions · Checked Nov 9, 2026
Official, in effect Conventional loans
Most conventional loans have a due-on-sale clause, which lets the lender demand full payment when the home is sold. Federal law lets lenders enforce it. So in a normal sale, a buyer usually can't take over a conventional loan. Ask the servicer if the specific loan allows an assumption.
For homes with fewer than five units, the same law bars the lender from using the clause in some cases, including a transfer to a relative after the borrower's death, a transfer where a spouse or children become owners, a divorce transfer to a spouse, a lease of three years or less with no purchase option, and a transfer into a living trust where the borrower stays a beneficiary.
Source: 12 U.S.C. § 1701j-3 (Garn-St Germain Act) · Checked Nov 9, 2026
Check before you count on it
With any assumption, the buyer still has to cover the gap between the price and the loan balance, in cash or with other financing. Ask the servicer for its timeline, fees and the documents it needs before you sign a contract.
Ask the loan servicer · Checked Nov 9, 2026
Related tools and pages
FHA vs conventional (2026) · VA funding fee · USDA rural loans · Jumbo vs conforming (2026) · Seller concessions · Cash flow calculator
General information only. Not legal, tax or financial advice. RentToolkit is not a lender, law firm or financial adviser. Mortgage rules change often and lenders can add stricter rules of their own ("overlays"), so confirm with the official source and a licensed loan officer before you act.