A Step-by-Step Guide to Assuming Your FHA Mortgage

There’s no denying that assuming a Federal Housing Administration or FHA mortgage can be a big decision! The process can go smoothly with the proper steps and assistance, and you’ll be on your way to becoming a homeowner!

At Assumption Solutions, we make starting and finishing your FHA assumable mortgage process simple so that you’ve got someone on your side at every step, no matter what. We’ve got years of experience and the expertise you need to make purchasing a home with an assumable FHA mortgage loan uncomplicated (and, dare we say — fun). 

Take a look at your easy step-by-step guide, complete with common FAQs:

a couple learning about assumable FHA mortgages

1. Understand FHA Mortgage Assumption Basics

Understanding the bottom line of your assumption of an FHA mortgage is essential. In Colorado Springs, numerous properties fall into this category. It’s best to understand:

What is a Mortgage Assumption?

Mortgage assumption involves taking over the existing mortgage on a property from the current borrower. You will compensate the seller for the amount they’ve already paid on the loan before they sign the remaining balance to you. Remember, you can only assume a home mortgage backed by a government loan (VA, USDA, or FHA).

What are the Benefits of Assuming an FHA Mortgage?

  • Lower interest rates
  • Reduced closing costs
  • Streamlined approval process
  • No need for a down payment

2. Determine Your FHA Mortgage Assumption Eligibility

You’ll need to know if you qualify for this type of mortgage and understand the requirements. Every home buyer must meet several eligibility essentials, which is why it’s a good idea to partner with professionals! Currently, in El Paso County, single-family homebuyers can borrow up to about $518,000, with the median sale price being $450,00.

Do I Meet Borrower Eligibility for an FHA Assumable Mortgage?

The assumptor must meet FHA qualifications, including creditworthiness and income requirements. 

How Do I Know if I Meet the Requirements for Property Eligibility?

Your property must be your primary residence, and certain property types may be ineligible, so talk with an expert like Assumption Solutions for more information. 

3. Contact Your Lender and Obtain Approval

When you’re ready to begin assuming your FHA mortgage, reach out to your lender to let them know your thoughts and goals. You’ll want to be sure to prepare the documents they need to proceed with the process. 

What documents do I need to submit when assuming a home loan?

Gather all your income and asset statements, any previous tax returns, relevant credit reports, and any other lender-requested documentation. 

How do I get a lender to approve my loan?

You’ll have to give your lender some time to assess the information you provide. They usually look at your credit history and financial stability. You’ll have to complete a lender assumption application before knowing if you qualify. 

Don’t feel intimidated by this part of the process. It’s not as bad as you think and can be done relatively quickly with adequate participation from you and your lender.  

5. Negotiate Any Necessary Terms with the Seller

You’ll need to work together as buyers and sellers with assumable mortgages to get both sides of the equation. It’s important that all parties involved adhere to providing open communication to avoid any misunderstandings. 

What will I need to discuss with my lender?

Your conversation with your lender should include questions about your home’s final purchase price, possible closing costs, and other conditions you’ll want to know about. You’ll be able to draft a purchase agreement that clearly outlines your mortgage assumption term, including any possible contingencies. 

a family standing outside of their home that's for sale with a VA assumable mortgage

6. Complete Your Mortgage Assumption Process

You’re almost there! This step of the assumable mortgage process is where every party involved will take the time to review the current FHA loan’s existing terms. You’ll know exactly what interest rate and the current loan balance apply to you while you solidify your personal repayment plan. 

How do you successfully reach the end of this process?

It’s time to find a pen because you’ll sign all the assumption documents that the lender will present. Be sure to know what closing requirements are involved for easy compliance. You may have to pay assumption fees or closing costs at this time.

7. Finalize Transfer of Ownership

Are you ready to finalize moving into your dream home? All that’s left for you to do is transfer your home’s title to you — the new owner!

Who do I work with to transfer my loan title?

It’s best to have an assumable mortgage professional on your side always, but especially for this step. This is where you’ll need to work on speaking with the appropriate legal channels. They can help you with a checklist of relevant parties who need to know about your home purchase, including:

  • Homeowner’s insurance providers
  • Local government offices
  • Lenders, etc.

There’s a lot to do to purchase a home with an assumable mortgage. You’ve made it this far, so give yourself a pat on the back!

someone holding keys in front of a house for sale with an assumable mortgage

8. Honey, You’re Home!

There aren’t a lot of questions that come from this final step because there’s really nothing left for you to do but get the keys and move into your beautiful new home. Congratulations on assuming your FHA mortgage and becoming a homeowner! Take pride in your new space and enjoy the benefits of homeownership. (You’re going to love it!)

Get Started With Assumption Solutions

Are you ready to start the process for yourself? Do you have more questions than what you see here? Send us a message or call Assumption Solutions today at 719-527-3380!

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