What types of loans are assumable?

Assumable loans are those that allow a new borrower to take over the loan obligations from the original borrower, typically under the same terms and conditions. VA Loans are notably assumable, meaning that if a VA loan is in place, a qualified buyer can step into the borrower’s shoes and continue making payments on that loan without needing to refinance. This can be particularly advantageous for buyers because they may inherit a lower interest rate than what is currently available in the market.

FHA Loans can also be assumable, but with certain stipulations and conditions that must be met to ensure the new borrower qualifies. Conventional loans, on the other hand, generally do not allow for assumptions unless the lender specifically permits it, which is less common. USDA Loans typically have restrictions that limit assumptions in certain cases.

In summary, the reason VA Loans are recognized as assumable is that they provide flexibility for buyers, allowing them access to favorable loan terms already secured by the original borrower, which can facilitate the purchase process and make these loans attractive in the market.