Loan Assumption

A loan assumption in Florida lets you take over the seller’s mortgage at their rate. When their rate is 3% and yours would be 7%, that is worth a great deal.

How a loan assumption in Florida works

• You take over the seller’s existing FHA, VA or USDA mortgage
• The rate and the remaining term stay as they are
• FHA loans can be assumed by any qualified buyer, with the servicer’s approval
• VA loans can be assumed by veterans and non-veterans alike, with consequences noted below
• You must qualify with the current servicer on income, credit and debt ratio
• You pay the seller the difference between the price and the remaining balance
• Conventional loans are generally not assumable

The equity gap is the real obstacle

Assumption sounds free and is not. You take over the balance, so the seller’s equity has to come from you in cash.

Consider a home selling at $450,000 with $260,000 left on the loan. You assume the $260,000 and hand the seller $190,000. That is a 42% down payment, far beyond what most buyers hold, and Florida appreciation since 2020 has widened this gap on exactly the loans worth assuming.

A second mortgage can bridge part of it, though it will carry today’s rates, which blunts the benefit. Therefore work out your blended rate across both loans before deciding. An assumed 3% first plus a 9% second may still beat a single 7% loan, or may not, depending on the split.

Veterans: your entitlement stays with the loan

This is the part that costs people, and it applies to the seller rather than the buyer.

When a veteran allows a non-veteran to assume their VA loan, the veteran’s entitlement remains tied to that mortgage until it is paid off. You have sold the house, yet the benefit is still attached to it, which can prevent you using a VA loan on your next purchase. A veteran buyer can substitute their own entitlement and release yours, so if you are selling with a VA loan, prefer a veteran buyer or understand exactly what you are giving up.

Read Florida VA loan benefits for how entitlement works.

Allow far more time than a normal purchase

Servicers process assumptions slowly, and 45 to 90 days is normal against 30 for a standard closing. Because the department handling them is often small and busy, build that into your contract and set expectations with the seller at the start.

Start by asking the servicer two questions in writing: is this loan assumable, and what is the current processing time? Everything else follows from those answers.

Figures above are illustrative. Assumption rules come from HUD Handbook 4000.1 for FHA and VA loan guaranty regulations for VA, including entitlement rules. Servicer requirements and timelines vary.