How assumable mortgages work in Colorado

By Simon Dzienis, Colorado Realtor · Updated October 2026

An assumable mortgage lets a buyer take over the seller's existing loan: the same interest rate, the same remaining balance and the same remaining term. With rates well above the 2–3% loans written in 2020–2022, that can cut a monthly payment by hundreds of dollars.

Which loans can be assumed

• FHA loans: assumable with the servicer's approval of the buyer's credit and income.
• VA loans: assumable by veterans and non-veterans with servicer (and sometimes VA) approval.
• USDA loans: assumable in some cases; the buyer must meet USDA income and property rules.
• Conventional loans: generally not assumable.

What it costs

• The equity gap: price minus the loan balance, paid to the seller at closing.
• The servicer's assumption fee: HUD caps it at $1,800 on FHA loans (raised from $900 in 2024). On VA loans the processing fee is set by VA and much lower.
• The VA funding fee on a VA assumption: 0.5% of the loan balance, unless exempt.
• Normal closing costs: title, recording, prepaids.

The timeline

Servicers generally decide within about 45 days of a complete file, but many assumptions take 60–90 days from contract to closing and some servicers are slower. The contract should give the servicer enough time and spell out what happens if approval is late.

Covering a big equity gap

Since 2024, VA guidance allows a second lien behind an assumed VA loan, and some lenders offer second mortgages for assumptions. Terms vary; they usually need good credit and a meaningful down payment. More on paying the equity gap.

Where we come in

We find homes with assumable loans, check the loan with the listing agent, write the offer with assumption terms and realistic dates, and stay on the servicer until the file is approved. Many listing agents have never done an assumption, so having someone who has matters.

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