DoorlarkThe short version
On an assumption, the buyer takes over the seller's loan at the seller's rate. They don't get the price financed. Everything between the price and the loan balance is the equity gap, and the buyer pays it in cash or with a second loan at today's rates. A big gap at a second-loan rate can erase most of the savings. That's what this calculator checks before your buyer falls in love with "3%".
How the math works
Equity gap = price − seller's loan balance
Cash needed = gap + VA funding fee (0.5% of balance, VA only)
Second loan = cash needed − buyer's cash
Assumption P&I = payment on the balance over the months left
+ payment on the second loan over its term
New-loan P&I = payment on (price − same cash) over 30 years
Savings = new-loan P&I − assumption P&I
Worked example (the default numbers)
| $450,000 price, $300,000 VA balance at 3%, 25 years left | $150,000 gap |
| VA funding fee: 0.5% × $300,000 | $1,500 |
| Buyer puts in $60,000, second loan covers the rest | $91,500 second |
| Assumed loan P&I | $1,422.63 |
| Second loan: $91,500 at 8.5%, 15 years | $901.04 |
| Assumption total | $2,323.67 |
| New loan: $390,000 at 6.25%, 30 years | $2,401.30 |
| Savings | $77.63 a month |
Example inputs, not market rates. Use real quotes.
Under $80 a month isn't much for a slower, harder closing. Now change one input: if the buyer has $150,000 for the gap and fee, there's no second loan. The payment is $1,422.63 on the assumed loan against $1,847.15 for a new $300,000 loan, about $424 a month less. The buyer's cash decides whether an assumption is worth it, more than the rate does.
Which loans can be assumed
- VA: assumable with the servicer's approval. The buyer is underwritten like a new VA borrower and pays a 0.5% funding fee in cash unless exempt. The servicer must decide within 45 days of a complete package. A second loan for the gap is allowed if it sits behind the VA loan and its payment counts in the buyer's debt ratio.
- VA entitlement: the buyer doesn't need to be a veteran. But unless an eligible veteran buyer substitutes their entitlement, the seller's entitlement stays tied to the loan until it's paid off. Tell your seller that before they agree.
- FHA: assumable with a creditworthiness review by the servicer. The FHA mortgage insurance stays with the loan.
- Most conventional loans: have a due-on-sale clause, which federal law lets the lender enforce. Treat them as not assumable unless the note says otherwise.
Questions to ask before you write the offer
- Who services the loan, and how long are their assumptions taking right now?
- What's the exact payoff balance, and is the loan current?
- Will the servicer release the seller from liability?
- Will a second lender lend behind this loan, and at what rate?
- On VA: is the buyer substituting entitlement, and does the seller understand what happens if not?
Script for the buyer who heard "assumable"
"The rate is real, but you'd take over the seller's balance, not the price. On this house that leaves [gap] to cover in cash or with a second loan at today's rates. Let me run both ways so you can see the actual monthly difference before we decide."
Run your own numbers: the agent net income calculator shows take-home per deal and per year after split, cap, fees, costs and a tax set-aside.
For planning only, not lending advice. Servicer approval, timelines and fees vary. Confirm every figure with the servicer and a loan officer. Doorlark isn't affiliated with VA or HUD.
Sources
- VA, Funding fee and closing costs (loan assumptions 0.5%)
- VA Circular 26-23-10, Assumption processing (underwriting, 45-day decision, funding fee paid at close)
- VA Circular 26-24-17, Secondary financing on assumptions
- HUD Handbook 4000.1, FHA Single Family Housing Policy (assumptions)
- 12 U.S.C. 1701j-3, Due-on-sale clauses (Garn-St Germain Act)
Checked Oct 30, 2026.
Related free tools and guides
- Seller Concessions Calculator: the most a seller can credit on conventional, FHA, VA and USDA loans.
- Seller Net Sheet Calculator: what the seller walks away with, line by line.
- Agent Net Income Calculator: your take-home per deal and per year after split, cap, costs and a tax set-aside.
- Property tax after you buy: why the buyer's first bill can be higher than the listing shows.
FAQ
How do you calculate the equity gap on an assumable mortgage?
Subtract the seller's current loan balance from the sale price. The buyer has to cover that difference in cash or with a second loan, plus a 0.5% funding fee on VA assumptions.
Is an assumable mortgage always cheaper?
No. If the buyer finances a large gap with a second loan at a high rate, the combined payment can come close to or above a new loan. Run both with real quotes.
Does a buyer have to be a veteran to assume a VA loan?
No, but the seller's VA entitlement stays tied to the loan unless an eligible veteran buyer substitutes their own entitlement.
How much is the VA funding fee on an assumption?
0.5% of the loan balance, paid in cash at closing, unless the buyer is exempt. It can't be added to the loan.
Are conventional loans assumable?
Most aren't. They carry a due-on-sale clause the lender can enforce when the home sells. Check the note.
Does Doorlark save my numbers?
No. The calculator runs in your browser and nothing is sent to us.
By Doorlark Editorial Team. For planning only, not legal, tax or financial advice.