To assume a mortgage means you take over the seller's home loan, with its rate and balance, instead of getting a new loan. In Tennessee, the loans you can usually assume are FHA, VA, and USDA loans. Most conventional loans can't be assumed because they have a due-on-sale rule. To start, the seller calls their loan servicer, the company that sends the monthly bill, and asks for the assumption department. The buyer applies and must be approved. The buyer also has to cover the gap between the price and the loan balance, with cash or a second loan if one is allowed.
A seller with an older loan may have a lower rate than buyers can get today. If that loan can be assumed, a buyer may be able to keep that rate. This page explains how it works in plain words and lists official places to check the rules yourself.
| Loan type | Can it be assumed? | What the official rules say |
|---|---|---|
| FHA | Usually yes | HUD says FHA-insured loans are assumable. For loans closed on or after December 15, 1989, the buyer must pass a credit review. Investors can't assume these newer FHA loans. |
| VA | Usually yes | The loan must be current. The buyer must meet VA credit and income standards. The buyer does not have to be a veteran. |
| USDA (guaranteed) | Usually yes | USDA Rural Development must approve it. The buyer takes over the whole debt and must meet USDA rules. A new guarantee fee is charged on the remaining balance. |
| Conventional | Usually no | Most have a due-on-sale rule. Fannie Mae allows a few exceptions, like some adjustable-rate loans and some transfers to family members. |
Not sure what kind of loan the seller has? Look at the monthly mortgage statement or the closing papers from when they bought the home. Or ask the servicer.
The servicer, not the original lender, usually handles assumptions. These are often two different companies. The CFPB explains the difference between a lender and a servicer in the sources below. The servicer's name and phone number are on the monthly statement.
Ask the servicer for a written list of every fee before you sign a contract.
It depends on the servicer. For VA loans, VA says a servicer with automatic authority must decide within 45 days after it gets a complete application. If the servicer does not have that authority, it sends the file to VA. Other loans have no set timeline, so ask the servicer and give yourself extra time in the contract.
This is the big catch. The buyer takes over only what is still owed on the loan. The rest of the price has to be paid another way.
Example: The price is $400,000. The loan balance is $250,000. The gap is $150,000. That is just math, not a quote.
If you sell your home and a buyer assumes your VA loan, your VA entitlement can stay tied to that loan until it is paid off. That can limit your next VA loan.
The fix is substitution of entitlement. The buyer must be an eligible veteran with enough entitlement and must plan to live in the home. Then the buyer's entitlement replaces yours, and yours can be restored. If the buyer is not a veteran, your entitlement stays tied up. Know this before you agree to the sale.
An assumption can make sense when the seller's rate is low and the gap is small enough to cover. A new loan can make sense when the gap is large, when the loan can't be assumed, or when you need to close fast. The best way to know is to compare both payments side by side.
It means the buyer takes over the seller's existing home loan. The buyer keeps the same interest rate, the same remaining balance, and the same remaining term. The buyer must still be approved by the loan servicer.
FHA, VA, and USDA loans can usually be assumed if the buyer qualifies and the servicer approves. Most conventional loans have a due-on-sale rule, so they usually can't be assumed, with a few exceptions such as some adjustable-rate loans and some family transfers.
Call the loan servicer, the company named on the seller's monthly mortgage statement. Ask for the assumption department. They will tell you if the loan can be assumed and send the application.
No. VA says any buyer who meets VA credit and income standards can assume a VA loan, even someone who is not a veteran. But if the buyer is not an eligible veteran who substitutes their own entitlement, the seller's VA entitlement stays tied to that loan.
It depends on the servicer and how fast the paperwork comes in. For VA loans, VA says a servicer with automatic authority must decide within 45 days after it gets a complete application. Plan extra time in your contract.
Costs depend on the loan. VA charges a 0.5% funding fee on assumptions unless the buyer is exempt. USDA charges a new guarantee fee on the remaining balance. Servicers may charge their own processing fee, and you still have normal closing costs. Ask the servicer for a written list of fees.
The buyer pays the gap with cash or, if the servicer and loan program allow it, a second loan. For example, on a $400,000 price with a $250,000 balance, the gap is $150,000. Ask the servicer early if a second loan is allowed.
Thinking about taking over a seller's loan in Franklin, Brentwood, or Nashville? I can help you compare an assumption with a new loan, and look at ways to cover the gap. Call me at (615) 495-6594, email travis@heathrowmtg.com, or start an application.
Links checked October 30, 2026. Rules can change, and each servicer sets its own process. This page is general information, not legal advice or a loan offer. No rate is promised. All loans are subject to approval. Travis Jost, NMLS #2191646, Heathrow Mortgage NMLS #1849599, 1850 General George Patton Dr, Ste B209, Franklin, TN 37067.
