How Assumable Mortgages Can Help Austin Homebuyers Save More

By Julie Gualandri

Julie arrived in Austin in 2008 and soon discovered a city that blended opportunity, vibrancy, and a sense of home. By 2010, she had found her true calling in real estate—a profession that allows her to pair market expertise with a deep commitment to service.

Have you noticed home listings that mention “assumable mortgage” and wondered what that actually means? With interest rates much higher than they were a few years ago, this option is getting a lot of attention from buyers who want to save money without waiting for rates to drop.

Let’s walk through how assumable mortgages work in simple terms so you can decide if this strategy makes sense for you.

What is an assumable mortgage, and why do buyers care? An assumable mortgage allows a buyer to take over the seller’s existing home loan rather than getting a new one. This means you also take over the seller’s interest rate. Many homeowners who bought in 2020 or 2021 have rates in the low twos or threes. Compared to today’s rates near seven percent, that difference can lower your monthly payment by hundreds of dollars.

Not all loans can be assumed. Most conventional loans do not qualify. Loans that can usually be assumed include FHA, VA, and USDA loans for certain rural areas. A VA loan can even be assumed by a non-veteran buyer, but the seller’s VA benefit stays tied to the loan until it is paid off. That is an important detail for both buyers and sellers to understand.

The equity gap and qualifying rules. When you assume a mortgage, you only take over what the seller still owes on the loan. The difference between the home’s price and the remaining loan balance is called the equity gap. Buyers must cover this gap using cash, savings, or another loan. This is often the biggest hurdle and the main reason assumable mortgages are not a fit for everyone.

Buyers also still need to qualify. Lenders will review your income, credit score, and debt-to-income ratio to make sure you can afford the loan. The process can also take longer than a typical purchase, sometimes 45 to 90 days, so patience and planning are important.

Why assumable mortgages are gaining attention. In a high-rate market, assumable mortgages can offer real advantages. Buyers may get a lower interest rate, smaller monthly payments, and, in some cases, lower closing costs. Sellers benefit too because advertising an assumable loan can help their home stand out and attract more buyers.

Assumable mortgages are not a magic solution, but they can make a big difference.

If you are thinking about buying a home and want to know whether an assumable mortgage could help you save money, I would be happy to help. Call or text me at 512-568-1222 or email julie@julieghomes.com, and we can walk through your numbers together. A quick conversation could help you decide if this smart strategy fits your goals and your budget.