Assumable Loans: A Shiny Loophole for VA Buyers (With a Few Catches)

Historic 2–3% mortgage rates didn’t disappear; they’re hiding in plain sight through assumable loans, especially for VA and FHA buyers.

Why This Matters

Assumable loans allow you to take over the seller’s existing mortgage, including their low interest rate. If a homeowner locked in a 2.75 percent VA loan back in 2021 and they’re now selling, you could step into that loan, rate and term included.

In a market where 6 to 7 percent rates are the norm, that’s a massive financial advantage. Lower monthly payments mean more cash flow, stronger long-term appreciation potential, and less pressure on your monthly budget.

But this strategy isn’t without its challenges. The biggest one? The gap.

The Numbers You Need to Understand

Let’s say a seller has $300,000 remaining on their assumable VA loan. The home is listed at $400,000.

You don’t just get the house for $300,000. You have to pay the difference, the $100,000 gap, either in cash or through a second loan.

Here’s how buyers typically make it work:

• Look for newer loans. Homes purchased more recently tend to have smaller equity gaps; that can mean a lower out-of-pocket cost to assume.

• Use a second loan. Financing the gap with a second mortgage often means a higher interest rate, but the combined payment is still usually lower than financing the full purchase at today’s 6 or 7 percent.

• Compare the blended cost. This is where strategy comes in. Add up the payment from the assumed mortgage and the second loan, then compare that to a full-market-rate mortgage. Many times, you’ll still come out ahead.

Short-Term vs. Long-Term Thinking

If this is your forever home, the math usually favors assuming the low-rate loan, even with a gap to cover. You’re locking in a generational rate that could save you tens of thousands over time.

But what if you’re planning to move in three to five years?

That changes things. In shorter time frames, you need to consider whether the neighborhood is likely to appreciate enough to recover your upfront gap, what kind of rent the property could bring if you decide to hold it as an investment, and whether the total blended loan structure supports strong exit strategies, such as selling or renting.

In fast-growing Northern Nevada markets like Reno, Sparks, and Fernley, the outlook is often favorable, but you still need to run the numbers.

One Trick Most VA Buyers Miss

Here’s something most people don’t realize: FHA loans are also assumable.

That means you don’t always have to use your VA loan benefit to get into an assumable property. If you find an FHA seller with a low-rate loan, you can assume it and keep your VA eligibility for later.

This is huge if you’re planning to buy again in a few years or want to save your VA loan for a higher-cost market or long-term hold.

Final Thoughts

Assumable loans aren’t a silver bullet, but they are one of the best-kept secrets in today’s high-rate market—especially for military families.

If you’re a veteran who’s willing to plan ahead, get strategic about the gap, and run the numbers the right way, assumables can be a serious wealth-building tool. The key is knowing where to look and how to analyze the deal.

Want help finding assumable deals or building a VA-based investing plan? Schedule a one-on-one strategy session with the Address Income team.