How the calculator works
When you assume a mortgage, you take over the seller's loan at its existing rate and remaining term. The catch is the gap: the seller has paid the loan down and the home may have gained value, so the price is usually well above the balance. You cover that gap with cash, a second loan or HELOC, or both.
- Gap = purchase price − assumable balance.
- Your cash goes toward the gap first. Whatever is left becomes the second loan.
- Your payment is the assumed loan's payment (at its rate, over the months left) plus the second loan's payment (at its rate and term).
- For comparison, the calculator prices a new mortgage for the same price with the same cash down at today's rate.
- The blended rate is the balance-weighted average of the two rates.
It then tracks interest month by month for both scenarios over the years you choose, and adds the assumption fees to the assumed side.
Worked example
A home is listed at $500,000. The seller has an FHA loan with $300,000 left at 3.0% and 312 months (26 years) to go. You have $100,000 in cash, so you need a $100,000 second loan. A 15-year second loan is offered at 8.5%, and a new 30-year mortgage would be 6.5%.
| Assume + second loan | New $400,000 loan | |
|---|---|---|
| Monthly principal & interest | $1,386 + $985 = $2,371 | $2,528 |
| Rate | 4.375% blended | 6.5% |
| Interest paid over 7 years | $108,199 | $174,040 |
| Assumption fee | $1,800 | — |
| Still owed after 7 years | $309,062 | $361,665 |
Assuming saves about $158 a month, and over seven years about $64,000 in interest and fees. You also owe about $52,600 less after seven years, because the second loan is paid off quickly and the old loan is already far along its schedule. The higher payment on the 15-year second loan is what keeps the monthly saving modest; a longer second-loan term lowers the payment but adds interest.
Which loans can be assumed
| Loan type | Assumable? | Key costs and conditions |
|---|---|---|
| FHA | Yes, with servicer credit approval | Processing fee capped at $1,800 by HUD (raised from $900 in May 2024) |
| VA | Yes, with approval; buyer need not be a Veteran | Funding fee 0.5% of the balance unless exempt, paid in cash at closing; processing fee up to $300 ($250 if VA approves it) plus credit report and a regional locality variance |
| USDA guaranteed | Yes, with Rural Development approval | Buyer and property must still qualify; new guarantee fee on the remaining balance; the seller stays personally liable |
| Conventional | Usually no | Most have a due-on-sale clause, which federal law lets lenders enforce on a sale |
The due-on-sale law also lists transfers a lender can't block on homes with fewer than five units, such as a transfer to a spouse or children, a transfer in a divorce settlement, or a transfer to a relative after the borrower dies. Those are not purchases by an outside buyer.
Edge cases
- Second-lien rules. Ask the servicer whether a second loan behind the assumed loan is allowed and how it must be structured.
- Timing. VA requires the servicer to decide within 45 days of a complete package. Assumptions often take longer than a normal purchase, so build that into your contract dates.
- Mortgage insurance. An FHA loan's annual MIP comes with it. The calculator compares principal and interest only.
- Closing costs on a new loan. The new-loan side leaves out points and origination fees, which would widen the gap in favor of assuming.
What to do next
Price the second loan with the HELOC payment calculator, check a VA or FHA alternative with the VA loan calculator or FHA loan calculator, and see what you can afford overall with the home affordability calculator.