Assumable Mortgage Calculator
Compare assuming a seller’s low-rate mortgage (plus cash or a second loan to cover the seller’s equity) with taking a new mortgage at today’s rate — monthly payments, gap financing and savings.
How it works
Gap = price − assumable balance · second loan = gap − cash down (if positive) · assumption payment = payment on the assumed balance (remaining term) + payment on the second loan · new-loan payment = payment on (price − cash down) at today’s rate · savings = new-loan payment − assumption payment
Government-backed loans such as FHA, VA and USDA mortgages — and many loans in other countries — can be assumed by a qualified buyer, who takes over the seller’s rate, balance and remaining term. The catch is the gap: the buyer must pay the seller’s equity in cash or with a second loan at a higher rate. The calculator blends both payments and compares them with a brand-new mortgage at today’s rate for the same cash down, so you can see whether the low assumed rate still wins after financing the gap.
Worked example
A 400,000 home has an assumable 280,000 balance at 3% with 25 years left: 1,327.79 a month. The seller’s equity is 120,000; 60,000 of cash leaves a 60,000 second loan at 8.5% over 20 years, 520.69 a month, for a total of 1,848.49 (blended rate 3.97%). A new 340,000 mortgage at 7% over 30 years costs 2,262.03, so assuming saves 413.54 a month.
Sources: Investopedia — Assumable Mortgage · U.S. News — What is an assumable mortgage?
Frequently asked questions
Which mortgages are assumable?
In the US, FHA, VA and USDA loans are generally assumable with lender approval; most conventional loans are not because of their due-on-sale clause. Elsewhere it depends on the lender and the loan contract.
How do I pay the seller’s equity?
With cash, a second mortgage or home equity loan, or seller financing. The higher rate on that gap loan is why the calculator shows a blended rate rather than just the assumed rate.
Does assuming a mortgage reset the term?
No. You take over the remaining term, so a loan with 25 years left is paid off in 25 years, which raises the payment compared with stretching the same balance over a new 30-year term.
Are there fees to assume a loan?
Usually an assumption fee, a credit and income review, and normal closing costs. They are typically lower than a new loan’s origination costs, but add them to the comparison.
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Educational estimate, not lending, legal, tax or investment advice. Lenders, landlords and appraisers apply their own definitions, fees and underwriting rules — confirm the figures with them or a licensed professional before you sign anything.