How Our Client Locked in a 4% Interest Rate + What You Need to Know About Assumable Mortgages

In today’s market, the idea of getting a 4% interest rate almost sounds like a myth. But earlier this year, one of our investor clients did exactly that, and it made all the difference in making their purchase possible.

Here’s how it happened and how you can take advantage of similar opportunities.

What Is an Assumable Mortgage?
An assumable mortgage allows a buyer to take over the seller’s existing loan, including its interest rate, balance, and terms.

Let’s say a seller locked in a mortgage at 4% back in 2021, and still owes $300,000. If you purchase their home and “assume” their loan, you pick up that same loan where they left off, instead of starting a brand-new one at today’s rates.

This can lead to massive savings over time and, in many cases, can make the difference between a deal that works and one that doesn’t.

The Catch: Not Every Loan Is Assumable
Most conventional loans are not assumable. However, VA and FHA loans often are.

That’s where our investor’s opportunity came in. The seller had a VA loan, and our client (though not a veteran) was still able to assume that loan and take over the remaining balance.

Fun fact: Investors and non–owner-occupants can sometimes assume VA or FHA loans, even if they aren’t the original type of borrower (veteran, first-time buyer, etc.).

Why It Mattered for This Deal
Our client was purchasing a rental property to hold long-term, but the math just didn’t work at today’s higher interest rates.

By assuming the seller’s 4% VA loan, they reduced their monthly payment enough to make the investment cash-flow positive from day one.

Without that assumable loan, the opportunity simply wouldn’t have made sense.

What to Know If You’re Considering This Strategy

1. You’ll still need to qualify with the existing lender to assume the loan.
   

2. You may need to bring cash to closing if the seller has built significant equity since you’re taking over their loan balance, not getting a brand-new one for the full purchase price.
   

3. Assumptions take longer to close since lenders must approve the transfer.
   

4. The payoff can be worth it, potentially saving you hundreds per month and tens of thousands over time.
   

Take Away
In a market where creativity matters, assumable mortgages are one of the smartest strategies available, especially for investors and buyers who want to make their money work harder.

At KBCO, we’re always watching for unique opportunities like this to help our clients buy homes and build wealth through real estate.

Curious if an assumable mortgage could work for you? Let’s talk through your goals and see what opportunities are out there!