You Can Still Get a 2% Mortgage. Here is How.

A client recently found a home they loved and asked me a question I have been hearing more often lately: "Is there any way to get a lower rate on this?" The home had an FHA loan on it from 2021. The seller's rate was 2.6%. I told them: yes, actually, there might be.

This is called an assumable mortgage and it is one of the more interesting options in today's market. The idea is simple: instead of getting a brand new loan at today's rates, you take over the seller's existing loan, including their interest rate, remaining balance and loan term. The seller walks away, you step in and that 2.6% rate becomes yours.

Inspired by: The Economist, July 17, 2025

The Savings Are Real

Let me put some numbers to this. On a $350,000 loan balance at 3%, your payment is around $1,476/month. That same balance at 7% is about $2,329/month. That is an $853/month difference, or over $10,000 a year. Over the life of the loan, you are talking about serious money.

It is no surprise that searches for "assumable mortgage" have spiked over the past couple of years. When rates jumped from 3% to 7%, buyers started looking for any path to an affordable payment. This is a real one, for the right situation.

The Catch (and It is a Real One)

Here is where I have to be straight with you, because I think some people hear "assumable mortgage" and get more excited than they should.

The biggest issue is the down payment. When you assume a mortgage, you are taking over the remaining loan balance but you still have to pay the seller for the equity they have built. If a seller bought their home for $600,000 in 2020, their loan balance might now be around $520,000. The home could be worth $900,000. That means you would need to cover the $380,000 gap in cash or a second loan. Most buyers do not have that sitting around.

A few other things to know:

1. Only government-backed loans are assumable. FHA, VA and USDA loans qualify. Conventional loans (which are the majority) do not. So your search pool is limited from the start.
2. It takes time. By law, the servicer has 45 days to process the assumption. In practice, it often takes several months. If you are in a competitive escrow, that can be a problem.
3. Servicers are not always motivated to help. Lenders make more money originating a new 6.5% loan than processing a transfer of a 2.5% loan. Some are slow. Third-party companies have popped up to help push these through, though they charge fees.
4. You still have to qualify. The lender reviews your credit, income and finances just like a regular loan. This is not a shortcut around underwriting.

Is It Worth Pursuing?

Possibly, if: you have enough cash to cover the equity gap, you are patient with the timeline and you are flexible on which homes you are willing to consider. The search is narrower than a regular purchase; you are limited to homes with assumable loans where the math actually works.

For most buyers I work with in California, especially first-time buyers, the equity gap is the dealbreaker. If you have the cash and the right property comes up, an assumable mortgage is absolutely worth exploring.

If you would like help thinking through whether a specific property works for this, feel free to call or email me. I am happy to run the numbers with you.

Rates shown are for illustrative purposes only and are not a commitment to lend. Actual rates depend on credit profile, loan type, property type and market conditions. Not all borrowers will qualify.