Here’s how it works: Let’s say you have an FHA mortgage with a 3.25% interest rate on a 30-year fixed-rate loan. Your monthly mortgage payment, including everything, is $3,000, and you owe $500,000 on your home. If you’re selling your house for $600,000, the buyer can put down $100,000 to assume your mortgage, allowing you to get the price you want for your home. This may help you to command more money for your home than if the buyer was getting a market interest rate.

If you have an FHA mortgage, the buyer can assume the mortgage directly with your mortgage company. However, the buyer will need to qualify based on their credit, income, and overall financial scenario. If they qualify, it could be beneficial for both parties. Otherwise, the buyer will need to use the market interest rate, which is currently around 6%. This could end up costing them more money, making it harder for them to offer you the price you want for your home. By allowing the buyer to assume your FHA mortgage, you may be able to get more money for your home while also helping the buyer get a more favorable payment.

This can increase the value of the property, allowing you to walk away with more net money after paying your realtor and paying off the mortgage at the close of escrow. To assume the mortgage, the buyer will need to work directly with your mortgage company. They will also need to bring in cash equal to the amount they are buying the house for, minus the amount left on your mortgage. For example, if they are buying the house for $600,000 and you owe $500,000 on your mortgage, they will need to bring $100,000 in cash to the table. Assuming an FHA loan can help you sell your house for more money while allowing the buyer to get an interest rate that is substantially below market.