Glossary
Assumable Mortgage
An assumable mortgage allows a buyer to assume the rate, repayment period, current principal balance and other terms of the seller’s existing mortgage rather than obtain a brand-new loan.
Most mortgages are not transferable from one borrower to another. That’s true of conventional loans, which are not government-insured (meaning they’re not an FHA, VA or USDA loan), as well as conforming loans that meet funding criteria for Fannie Mae and Freddie Mac.
For these mortgage transfers to work, the new borrower needs to be added to the property’s deed, the owner needs to be removed from the deed or a spouse relinquishing ownership must sign a quitclaim deed.
Conforming Loan
A conforming loan is a mortgage eligible to be purchased by Fannie Mae and Freddie Mac, the government-sponsored enterprises, or GSEs, because it meets — or conforms — to their standards, including limits on the amount that can be borrowed.
The 2023 conforming loan limit for a single-family home is $726,200 in most housing markets. In higher-cost areas, the limit is $1,089,300.
References
- Assumable Mortgage
- Assumable Mortgage: What It Is and How It Works | Lending Tree
- Assumable Mortgage: What It Is And How It Works | Rocket Mortgage
- What to know about assumable mortgages | BankRate
- What is a conforming mortgage loan? | BankRate