Important: Example only. Assuming a mortgage requires lender or servicer approval. This page does not say whether a loan is assumable or whether you qualify. Contrast with subject-to: that path leaves the loan in the seller's name without approval; this path seeks a formal assumption.
Read first. Not legal, tax, lending, or financial advice, and not a lender quote or approval. An assumption needs the servicer's or lender's written approval. Not every loan is assumable; FHA, VA, and USDA rules differ on credit, occupancy, funding fees, MIP, and (for VA) entitlement and release of liability. Most conventional loans are not assumable because of due-on-sale clauses. Fees, timelines, and secondary-financing rules change—confirm every figure with the servicer before you rely on them.
Cash to close
$125,400
Assumed P&I
$1,337.08
Monthly vs new loan (same balance)
+$526/mo
Estimated interest difference
$237,410
Unequal loan terms · 27 remaining years vs 30 new years
Day-one equity
$120,000
Market value minus assumed balance
Monthly cash flow
+$623
Equity gap is $120,000. Assumed PITI is $1,837.08. A new loan on the same $280,000 at 7% would be $1,862.85 in principal and interest. Cash-on-cash is 6.0%.
The assumed P&I is figured from the balance, rate, and years left. Type the amount from the seller's mortgage statement for a better number.
FHA loans are often assumable with credit approval, but MIP, program fees, occupancy, and secondary-financing rules are set by the program and the servicer. Type the real fee; do not invent one.
Cash to close
Equity gap (price − assumed balance)
$120,000
Assumption fee
$1,400
Buyer closing costs
$6,000
Seller credits
−$2,000
Extra cash (repairs / prepaid)
$0
Gap / 2nd loan
−$0
Cash to close
$125,400
Assume vs new loan
Assumed P&I (figured) @ 3.5%
$1,337.08
New loan on same balance @ 7% / 30 yr
$1,862.85
Monthly savings on the note
+$526
Lifetime interest on assumed loan (remaining term)
$153,212
Lifetime interest on same-balance new loan
$390,622
Lifetime interest savings (rough)
+$237,410
New purchase loan (price − cash to close)
$274,600
New purchase P&I (same cash in)
$1,826.92
Assumed P&I + gap payment
$1,337.08
Full-deal monthly edge (new purchase − assumed path)
+$490
Month by month
Rent after vacancy
$2,660.00
Assumed principal and interest (figured)
−$1,337.08
Property tax and insurance
−$500.00
Other costs
−$200.00
Monthly cash flow
$622.92
If you sell after 5 years
Value after 5 years
$463,710
Selling costs
−$27,823
Assumed loan balance then
−$245,931
Net from the sale
$189,956
Cash flow over 5 years
+$37,375
Cash to close
−$125,400
Profit before income tax
+$101,932
Rough annual IRR
13.8%
Lifetime interest compares the remaining assumed schedule with a new loan on the same balance at today's rate and term — different lengths, so treat it as a rough edge, not a promise. The exit assumes both loans stay in place and are paid on time, flat rent and costs, and no income tax. Approval, fees, and secondary financing are between you and the servicer.
Read this before you chase an assumption
Lender approval is required. Unlike a subject-to purchase, a formal assumption puts you on the note after the servicer reviews credit, income, and program rules. Until that closes, you do not have the loan.
Not every loan is assumable. FHA, VA, and USDA loans are commonly assumable with approval. Most conventional fixed-rate loans are not, because of due-on-sale language under the Garn-St Germain Act (12 U.S.C. 1701j-3). Ask the servicer in writing.
Fees and entitlement differ by program. VA funding fees, FHA MIP, USDA program fees, and release-of-liability rules are not the same. Type the fee the servicer quotes. For VA, entitlement restoration and release of liability are separate questions.
The equity gap is real cash or a second loan. A low rate does not erase the difference between price and balance. Confirm whether the first loan allows secondary financing before you count on a gap loan.
Example figures only. No result is a quote, an approval, or advice. Use a real estate attorney and the loan servicer before anyone signs.
RE Underwrite Lab Pro
Underwrite the rental in full
An assumption is only as good as the property behind it. The paid rental worksheet builds the cash flow line by line, with rent growth, repairs, capex, management, and a year-by-year hold. Run it again with a new loan at today's rate to see how the house holds up if the assumption falls through. Save the deal and print the report. 48-hour free trial, then $9.99 a month. Cancel anytime.
Example only. Not financial, investment, legal, tax, lending, or appraisal advice.
An assumable mortgage lets a qualified buyer take over the seller's existing loan—balance, rate, and remaining term—after the lender or servicer approves. Type the numbers to see the equity gap, cash to close, assumed payments versus a new loan today, lifetime interest savings, and optional rental cash flow.
Leave the monthly P&I at 0 and the calculator figures it from the balance, rate, and years left. Type the real payment from the seller's statement when you have it. Loan type is for fee and copy context only; it is not an eligibility check. Not legal, tax, lending, or financial advice, and not a lender quote. Assumption requires written approval, and not every loan is assumable.
Not legal, tax, lending, or financial advice, and not a lender quote or approval. An assumption needs the servicer's or lender's written approval. Not every loan is assumable; FHA, VA, and USDA rules differ on credit, occupancy, funding fees, MIP, and (for VA) entitlement and release of liability. Most conventional loans are not assumable because of due-on-sale clauses. Fees, timelines, and secondary-financing rules change—confirm every figure with the servicer before you rely on them. Modeling a purchase that leaves the loan in the seller's name without approval? Use the subject-to deal calculator. Seller carrying a note instead? Try the seller financing calculator or the wraparound mortgage calculator. Want the same numbers walked through step by step? Read how assumable mortgages work.
What this measures
Unlike a subject-to purchase, a formal assumption puts you on the note after the servicer reviews credit, income, and program rules. FHA, VA, and USDA loans are commonly assumable with approval; most conventional fixed-rate loans are not, because of due-on-sale clauses.
The equity gap is the purchase price minus the remaining loan balance. You cover it with cash, permitted secondary financing, or both, plus the assumption fee and closing costs, minus seller credits. A low rate does not erase that cash need.
The calculator answers four questions. How much cash does it take to close? What is the assumed payment versus a new loan on the same balance and versus a new purchase loan with the same cash in? How much lifetime interest might you save on the note? And if you rent and later sell, what do cash flow and exit profit look like?
Formula
Equity gap = purchase price − assumed balance. Cash to close = equity gap + assumption fee + closing costs − seller credits + extra cash − gap loan.
Assumed P&I is typed, or amortizing on balance, rate, and years left. PITI = assumed P&I + tax + insurance. Monthly cash flow = rent × (1 − vacancy) − PITI − gap payment − other. Cash-on-cash = yearly cash flow ÷ cash to close.
Rate edge = new-loan P&I on the same balance at today's rate and term − assumed P&I. Full-deal edge = new purchase P&I (price − cash to close) − (assumed P&I + gap). Lifetime interest compares the remaining assumed schedule with that same-balance new loan.
Example
Example
The sample deal: a $400,000 house with a $280,000 assumable balance at 3.5% and 27 years left. Assumption fee $1,400, closing costs $6,000, seller credits $2,000, so cash to close is $125,400. Assumed P&I is $1,337.08; PITI with $350 tax and $150 insurance is $1,837.08. Rent $2,800 at 5% vacancy and $200 other costs cash flows $622.92 a month. A new loan on the same balance at 7% / 30 years would be $1,862.85, or $525.77 a month more. Cash to close is $125,400. Monthly cash flow is $623. Cash-on-cash is 6.0%.
Illustrative example. The value, loan, rent, and costs are sample inputs so the math is visible. They are not a property, a seller, a loan approval, or a deal RE Underwrite Lab did. The full walk-through with the same numbers is in the guide to how assumable mortgages work.
Risks to read before you chase an assumption
Approval is required. Until the servicer approves and you close, you do not have the loan. Listing language that says 'assumable' is not approval.
Program rules differ. FHA, VA, and USDA set different credit, occupancy, fee, MIP or USDA fees, and release-of-liability rules. VA entitlement restoration is a separate question from release of liability. Type the fee the servicer quotes.
Secondary financing may be limited or banned. Confirm whether a gap / second loan is allowed before you underwrite with one.
Conventional loans are usually not assumable. Due-on-sale clauses, which the Garn-St Germain Act (12 U.S.C. 1701j-3) generally lets lenders enforce, typically require payoff at sale.
Subject-to is a different path. That structure leaves the loan in the seller's name without approval. Use the subject-to calculator for that model, not this one.
Example
Second example
Illustrative example. Same house, but you finance $50,000 of the equity gap at 8% over 15 years. The gap payment is about $477.83, cash to close falls to $75,400, and the blended rate on $330,000 of total debt is about 4.18%. Monthly cash flow after the higher debt service is thinner. These figures are made up. They are not the sample in the form above.
When this ratio misleads
A large monthly savings on the note can hide a cash-heavy equity gap or a second loan the first servicer will not allow. Lifetime interest also compares unequal terms (remaining assumed years versus a fresh 30-year loan), so treat it as a rough edge. The exit leans on the appreciation you type and includes no income tax.
Common pitfalls
Underwriting the rate alone. The equity gap, assumption fee, and closing costs are real cash even when the payment looks cheap.
Counting on gap financing without checking the first loan. Many programs limit or ban secondary financing used to cover the gap.
Treating this page as a quote or approval. Only the servicer's written process creates an assumption, and fees change.
Questions
What does an assumable mortgage calculator show?
The equity gap, cash to close, assumed principal and interest versus a new loan today, rough lifetime interest savings, and optional rental cash flow and exit profit from the numbers you type.
Do I need lender approval to assume a mortgage?
Yes for a formal assumption. The servicer reviews credit, income, and program rules. That is different from a subject-to purchase that leaves the loan in the seller's name without approval.
Which loans can be assumed?
FHA, VA, and USDA loans are commonly assumable with approval. Most conventional fixed-rate loans are not, because of due-on-sale clauses. Confirm with the servicer in writing.
What is the equity gap?
Purchase price minus the remaining loan balance. You cover it with cash, permitted secondary financing, or both, plus fees and closing costs, minus seller credits.
How is this different from subject-to?
An assumption seeks lender approval and puts you on the note when it closes. Subject-to leaves the seller as borrower without that approval, so the due-on-sale clause still applies.
Is this a lender quote or advice?
No. It is arithmetic on the numbers you type. Fees, approval, entitlement, and secondary-financing rules come from the servicer and the loan program.
Estimates only. Not financial, legal, tax, or investment advice. RE Underwrite Lab calculators and PDF reports provide educational estimates based on the numbers you enter. Actual purchase costs, rents, expenses, financing terms, taxes, insurance, vacancy, rehab costs, refinance eligibility, and returns vary by property, market, lender, and local law (including short-term rental rules). We do not guarantee any outcome, profit, cash flow, or appraisal. Some content and tools may be generated or assisted by artificial intelligence and can contain errors. Always verify assumptions with licensed professionals and your own due diligence before making decisions.