Half the mortgages in America are worth more than the houses they are attached to.

Not literally — but close enough to matter. 49.9% of every outstanding U.S. mortgage carries a rate under 4%, and two-thirds are under 5%. That is FHFA's National Mortgage Database as of the first quarter of 2026.

Those loans are not all assumable. You need FHA, VA or USDA for that, and roughly 23% of the approximately 52 million mortgages outstanding are federally backed. But 18% of everything originated in 2020 was FHA or VA, and AssumeList estimates something on the order of six million American homes carry an assumable loan under 5%.

Six million. And almost none of them are labeled.

Roam found 433 Houston listings with assumable sub-3% loans. Zillow showed three. Three — because Zillow depends on the seller volunteering the information, and most sellers have no idea their loan is an asset.

So the deals are not scarce. The labels are scarce. That is the whole opportunity, and this page is about how to work it.

I'm Rob Bergeron, a licensed Kentucky Realtor and the owner of Winner Realty in Louisville.

Which loans are actually assumable

FHA — yes, with conditions. The governing regulation is 24 CFR 203.512. It bars lenders from restricting conveyance except in two specific ways: the lender may require that at least one person acquiring ownership be determined creditworthy under applicable standards, and the lender may bar an assumption by someone who cannot be approved as a substitute mortgagor because the property will not be a primary or secondary residence.

Read that second one twice, because it kills a plan a lot of investors are carrying around. You are not assuming an FHA loan as an investor. The regulation lets the lender refuse anyone who will not occupy, and every servicer exercises that. Treat it as a closed door — while knowing it is the lender's option, not a criminal statute.

The processing fee cap doubled in 2024, from $900 to $1,800, having been unchanged since 2016. The servicer may charge that plus a credit report and underwriting charge.

VA — assumable by veterans and non-veterans, with holder and VA approval. The funding fee on an assumption is 0.50% of the balance, which is statutory, at 38 U.S.C. 3729. The usual exemptions apply — veterans receiving or entitled to service-connected disability compensation, certain surviving spouses, Purple Heart recipients.

And here is the thing every agent in this town should know and most do not. If a veteran assumes and VA approves substitution of entitlement, the seller's entitlement comes back. If a non-veteran assumes, the seller's entitlement stays tied up in that loan until it is paid off — even with a release of personal liability. That veteran cannot use their benefit on the next house.

VA got tired of that being misrepresented. In April 2024, Circular 26-24-9 created VA Form 26-10291, the Assumption Entitlement Acknowledgement. The lender must hand it to the veteran immediately after an assumption application comes in, and the veteran signs it no later than closing. The form exists because people were getting this wrong.

USDA — assumable under 7 CFR 3555.256, two ways: new rates and terms, where the new rate cannot exceed the original, or same rates and terms. But the transferee must still meet full program eligibility, which means income limits and rural-area eligibility still apply. In our footprint that matters in Bullitt, Oldham and Shelby counties and across Southern Indiana.

Conventional — generally no. Fannie's servicing guide directs servicers to enforce the due-on-sale provision when a transfer is not approved. The exception is ARMs: most Fannie ARM plans permit transfer to a creditworthy purchaser, though named plans prohibit it during the fixed-rate period. So a 2021 7/1 ARM past its fixed period is worth a servicer call. Rare. Not never.

Can an LLC assume? Effectively no, on any of the owner-occupied government programs — the assumer has to be a person who is going to live there. Do not plan around it.

The part that matters more than anything else

Approval of the assumption and release of the seller's liability are two separate decisions.

Two. Separate. Decisions.

If the buyer assumes and the seller does not get a release, the seller is still on that note. A default lands on the seller's credit. The payment may count against the seller's debt-to-income on their next purchase. On a VA loan the entitlement stays frozen.

VA's form for this is 26-6381, Application for Assumption Approval and/or Release from Personal Liability — and the "and/or" in that title is doing an enormous amount of work.

The CFPB documented servicers who "deny requests to remove original borrowers from mortgages, even after successors have made payments for years." That is not hypothetical.

If you represent a seller on an assumption, the release is the deal. Not the price. The release.

It takes longer than you want

The servicer controls the clock and the servicer is not in a hurry.

The CFPB found successors and assumers waiting "months or even years," with servicers repeatedly requesting identical documentation or failing to respond at all. NPR reported that servicers have 45 days to evaluate a transfer but that in practice it "can take months."

VA put teeth in this in December 2023. Circular 26-23-27 made willful refusal to process a qualifying assumption a defense against guaranty liability — with escalation to Ginnie Mae reducing the guaranty to zero, referral to the Inspector General, and possible permanent prohibition from servicing VA loans. Most agents do not know that hammer exists. VA Loan Guaranty escalation: 877-827-3702.

Practically: write a 90-day contract with an assumption contingency, submit a complete package on day one, escalate in writing, and get the servicer's turn-time estimate before you write the offer, not after.

The equity gap, which is why most assumable loans never get assumed

The assumption transfers the remaining balance. Only the balance.

On a $250,000 house with a $200,000 loan, the buyer brings $50,000, plus the fee, plus closing costs.

Laurie Goodman at the Urban Institute put it about as well as it can be put: the buyers who most want a 3% rate are the last people who can come up with an extra couple hundred thousand in cash.

Three ways through it.

A second mortgage behind the assumption. VA has published guidance — Circular 26-24-17, August 2024. The junior lien must be subordinate; the file documents the lender, amount and repayment terms; proceeds may cover closing costs and amounts owed the seller, but the assumer gets no cash back. The second's payment counts in the debt calculation, and its rate may exceed the VA rate and is negotiable. The circular does not impose a CLTV cap, but it also does not say there is not one — and the second-lien lender will have its own view, so ask.

For FHA, I could not confirm the current position from Handbook 4000.1, so I am not going to tell you a piggyback second behind an FHA assumption is allowed. Confirm with the servicer, deal by deal.

A seller carryback second, disclosed to and approved by the servicer, subordinate to the first.

Or a platform. Roam arranges piggyback seconds through partner lenders and announced a partnership with Opendoor in November 2025. Second-lien shops are actively courting this business.

The math

A $250,000 Louisville house. The seller's FHA loan: $200,000 remaining at 2.75%, originated in 2021, 300 payments left.

Assume that loan and the principal and interest is $922.62 a month.

A new $200,000 loan at a market rate around 6.76% runs $1,298.53 over thirty years, or $1,383.09 over a matched 25-year term.

Monthly difference: $375.90 against a new 30-year. $460.46 against an apples-to-apples 25-year.

Total interest: $76,787 on the assumed loan. $214,926 on the matched new one.

A hundred and thirty-eight thousand dollars. Same house, same buyer, same week. The only difference is which piece of paper came with it.

Now the catch, which any agent should say out loud at the kitchen table. The buyer needs $50,000 for the gap, plus the $1,800 fee, plus costs. Put a $50,000 second on it and the blended payment lands near the new-loan payment anyway — but you have still saved most of that interest on the first lien, and the second can be refinanced later while the 2.75% first rides untouched for twenty-five years.

One more thing nobody mentions: the assumed loan carries the seller's MIP, not today's. An FHA loan originated in 2021 at 3.5% down carries 0.85% annual mortgage insurance that does not fall off — about $142 a month on $200,000 — where loans endorsed after Mortgagee Letter 2023-05 sit at 0.55%. It does not kill the deal, but it eats about a third of the monthly savings.

(Rates move. Re-run these numbers against today's market rate before relying on them.)

How to find them in Louisville

Your MLS already has the field. Four of them, actually. There is a standard BuyerFinancing field with an "Assumable" value. There is a custom General Property Description field, Assumable, yes or no. There is a Status Change Info financing list that includes Assumable and Owner Carry. And Sold Terms includes Assumption and Seller Financing.

When I last ran that filter there were 23 active residential listings flagged assumable out of roughly 4,183 — about half a percent, or one in 182, ranging from $120,000 to $619,900 across Louisville, Shelbyville, Brandenburg and Leitchfield. That count moves; treat it as a snapshot. If you are an agent reading this and you have never run that filter, run it today.

Then go find the ones nobody flagged, which is where the actual money is.

Public records. The Jefferson County Clerk's online land records. An FHA mortgage carries an FHA case number — nine or ten digits, usually on the first page or in a rider. A VA loan shows a VA loan identification number and, more usefully, an attached VA Assumption Policy Rider. The rider title is the fastest tell there is; you can spot it without reading a word of the document.

Filter recordings to 2020 and 2021 and you are looking at sub-3.5% notes.

Platforms: Roam, AssumeList, Assumable.io. Assumable.io claims 50,000-plus listings and an index of seven million homes with sub-4% rates, but publishes no methodology — treat that as a claim rather than a fact.

And the simplest method, which is the one I would lead with: ask the seller for their mortgage statement. Loan type, balance, rate and servicer are all on page one. Then call the servicer's assumption department and confirm assumability, the fee and the current processing time. In writing. Before anything gets advertised.

What an agent may legally say about it

This section is for licensees, and it is the part that gets skipped.

Regulation Z, 12 CFR 1026.24. If an advertisement for credit states specific credit terms, it may state only terms that are actually offered. The triggering terms in (d)(1) are: the amount or percentage of any downpayment; the number of payments or period of repayment; the amount of any payment; and the amount of any finance charge.

Trip any one of those and you owe the (d)(2) disclosures — the downpayment amount, the full repayment terms including any balloon, and the annual percentage rate, using that term, plus a statement if the rate can increase. On dwelling-secured credit you must also disclose each simple annual rate and the period it applies to, with the APR given equal or greater prominence.

So: "Assume the seller's loan — $922 a month!" is a payment amount. That is a triggering term, and you now owe the full disclosure set.

"Assumable FHA loan at 2.75%" — the rate alone is not a triggering term under (d)(1). But subsection (c) is a separate trap: if an ad states a rate of finance charge, it is supposed to state it as an annual percentage rate. The safest answer is to name the loan type and leave the number out entirely.

Does Reg Z bind a real estate agent who is not the creditor? On the verifiable text, that is genuinely unsettled. So do not assume you are exempt. Plenty of brokerage counsel treat an agent ad quoting a rate or a payment as triggering it, and that is the defensible posture.

Safe practice in the remarks:

"Seller's FHA loan may be assumable. Rate, terms and assumption subject to servicer approval and buyer qualification. Buyer to verify all loan terms independently. Buyer must cover the difference between purchase price and loan balance."

Name the loan type. Skip the payment.

And verify before you advertise, because 201 KAR 11:105 requires that licensee advertising not be false, misleading or deceptive, requires brokerage and principal-broker identification on every advertisement — each individual viewable page or post counts as a separate advertisement, with required content visible without scrolling — and requires the owner's written consent. 201 KAR 11:121 adds the disclosure and reasonable-care duties and requires a contract to specify the manner of financing and the amount of any encumbrance and who is underwriting it.

Fair Housing: an assumable loan is a financing term, not a buyer filter. Never write "veterans only." Two reasons, and the second is the one that matters: a non-veteran can assume a VA loan, so it is inaccurate — and prior military service has been a protected class in Louisville Metro since December 2020, so an advertisement stating that preference is a Fair Housing problem on its face. If preserving a seller's entitlement has economic value, price the risk. Do not screen buyers for it.

Subject-to is not an assumption

Subject-to is where the buyer takes title and the seller's loan stays in the seller's name. No lender approval. No underwriting. No assumption fee. And no release of liability — not delayed, not conditional. Never.

The due-on-sale clause, 12 U.S.C. 1701j-3, authorizes the lender at its option to accelerate when the property is sold or transferred without written consent, and subsection (b) preempts contrary state law — the exercise of that option is governed exclusively by the loan contract.

Garn-St Germain lists exemptions where a lender may not accelerate on residential property under five units: subordinate liens that do not transfer occupancy rights, purchase-money security interests in household appliances, transfer by devise or descent on a joint tenant's death, a lease of three years or less with no purchase option, transfer to a relative on the borrower's death, transfer to a spouse or children, transfer under a divorce decree or property settlement, and transfer into an inter vivos trust where the borrower remains a beneficiary and occupancy does not change.

A standard investor subject-to deal fits none of them.

Which makes it legal and callable at the same time. Does it get called often? Nobody knows — there is no published data on acceleration frequency, and anyone who quotes you a percentage made it up. The incentive argument cuts the investor's way: a lender holding a 2.5% note would rather redeploy at 6.5%. That is logic, not evidence.

What the seller is actually agreeing to, and this is what should be repeated back before anyone signs: the debt stays on their credit and their debt-to-income, which can block their next purchase. A buyer default becomes their foreclosure. A lapsed insurance policy lands on their name. On a VA loan their entitlement is frozen indefinitely. And if acceleration comes, it comes to them.

The mitigations that separate a documented subject-to from a handshake: third-party servicing — an independent servicer collecting, remitting, running escrow and issuing the 1098 — and an insurance policy naming the buyer as insured with the seller as additional insured. A policy still naming only the seller after title has moved is a claim denial waiting to happen.

For a Kentucky licensee: disclose the due-on-sale exposure to the seller in writing, state the encumbrance and who underwrites it in the contract as 201 KAR 11:121 requires, tell both sides to get their own counsel, and do not draft the documents yourself — that is practicing law. And never tell a seller they are "off the loan." They are not.

Why this matters beyond one deal

FHFA economists estimate that mortgage rate lock-in prevented 1.72 million home sales between the spring of 2022 and the middle of 2024. Not delayed. Did not happen.

American homeowners are sitting on roughly $35.8 trillion in equity as of mid-2026, per the Federal Reserve's own figures, against a national debt around $40 trillion. Most of that equity is not moving, because a homeowner with a 3% mortgage is not going to sell and replace it with a comparable house financed at nearly 7%.

There are bills in Congress addressing this — the MOVE Act, which would require Fannie and Freddie to purchase portable mortgages; the Take Your Rate Act, which orders HUD and FHFA to study assumability and portability; and the More Homes on the Market Act, which would double the capital-gains exclusion on a primary residence and index it to inflation after twenty-nine years frozen. FHFA's director said in November 2025 that the agency is evaluating how to do assumable and portable mortgages safely.

None of them has moved out of committee.

Which is the practical point of this entire page. The tools that work around the lock-in already exist — assumptions, wraps, contract sales, seller carries. The paperwork is here now. Policy is the slow part, and you do not need to wait for it.

Frequently asked questions

Which mortgages are assumable?

FHA, VA and USDA loans are generally assumable with lender and agency approval and full credit underwriting of the new borrower. Conventional loans generally are not, because of the due-on-sale clause, though many adjustable-rate plans permit transfer to a creditworthy purchaser after the fixed-rate period.

Can an investor assume an FHA loan?

No, in practice. 24 CFR 203.512 permits the lender to bar an assumption by anyone who cannot be approved as a substitute mortgagor because the property will not be a primary or secondary residence, and servicers exercise that. The assumer must occupy the home. The same occupancy requirement means an LLC cannot assume.

Does the seller stay liable after someone assumes their mortgage?

Yes, unless a separate release of liability is approved. Assumption approval and release from personal liability are two distinct decisions — VA's form is literally titled "Application for Assumption Approval and/or Release from Personal Liability." Without the release the debt remains on the seller's credit and debt-to-income.

What happens to a veteran's VA entitlement when someone assumes the loan?

If a veteran assumes and VA approves substitution of entitlement, the seller's entitlement is restored. If a non-veteran assumes, the seller's entitlement remains tied to that loan until it is paid off, even with a release of personal liability. VA Form 26-10291 exists to make sure the veteran acknowledges this before closing.

How do I find assumable mortgages in Louisville?

The Louisville MLS carries an assumable flag in several fields, including a standard BuyerFinancing value. Beyond that, county land records reveal FHA case numbers and VA Assumption Policy Riders on recorded mortgages — filtering 2020 and 2021 recordings surfaces sub-3.5% notes that were never advertised. The simplest method is asking a seller for their mortgage statement and calling the servicer's assumption department.

What is the difference between an assumption and subject-to?

In an assumption the lender approves the new borrower and the loan is formally transferred, with a possible release of the seller's liability. In a subject-to, the buyer takes title while the loan stays in the seller's name with no lender approval and no release — leaving the seller liable and the loan exposed to acceleration under the due-on-sale clause at 12 U.S.C. 1701j-3.

Related reading

Seller financing and land contracts in Kentucky · Rent-to-own and lease options in Kentucky · Is wholesaling real estate legal in Kentucky?