It was a typical 2025 brief for Kevin Hosner, a real estate agent in Johns Creek, an affluent suburb of Atlanta, Georgia. A young couple, both teachers, asked him for help as they tried to problem solve their housing challenge. The pair had outgrown their house, after having three children in the preceding five years. They wanted to trade up to a larger property. Most of the homes they liked were priced around $400,000, and they were expecting to sell their own, a three-bedroom, for $339,000.

There was just one issue: the difference in cost of the new monthly mortgage payment given the rise in interest rates over those five years. US rates hit a low of 2.65 per cent in January 2021 but by 2024 were averaging 6.7 per cent for the year; a rise of more than 150 per cent. "They could not afford that 6 per cent interest rate" on top of the price difference in the new home, says Hosner. He suggested a solution: to focus the search solely on homes of that price with assumable mortgages -- a historic loan, usually with a low interest rate, which can be taken on as a package by a new buyer together with the home.

Hosner found them such a property: a $435,000 house with five bedrooms, and with a mortgage of $332,400 loaned at 2.5 per cent. "The [monthly] payment ended up being less than the [original] one," he says. Five years ago, Hosner had dealt with a handful of loans like this; now, around two-thirds of all deals he handles have an assumable component. "It's the vast majority of my business -- every person that's a happy customer with a 2.5 per cent mortgage? They tell 10 friends."

Assumable mortgages like this were once commonplace in the US, when mortgage rates were high. In October 1981, mortgage rates hit around 18 per cent -- and at the time, an assumable mortgage from 1972 might offer a rate as low as 7.3 per cent. The following year, however, such loans fell from favour when the Garn-St Germain Act deregulated the savings and loan landscape for the first time. Among other changes, it made due-on-sale clauses to standard mortgage contracts enforceable, so that loans were now locked not to the property but to the borrower.

The government did, however, allow some mortgages it underwrote to remain linked to the property -- those mortgages issued by the Federal Housing Authority (FHA), the Veterans Affairs department (VA) or the US Department of Agriculture (USDA). The driver for demurring that change was simple: such government agencies had broader agendas. The FHA, for example, wanted to get more first-time buyers on the housing ladder, while the VA aimed to help both discharged service people and those being redeployed around the country to build equity.

Both have constraints on the size of the loan they'll guarantee, meaning that most homes with assumable mortgages are likely to be smaller starter properties. But not exclusively.

The FHA and VA-backed holdouts have maintained a small but significant niche. More than four decades after the Garn-St Germain Act, 23 per cent of all mortgages are government backed, according to the FHA; up to 12.5mn loans have the potential to be assumable. And they could be compellingly affordable, too: ICE Mortgage Technology, once known as Ellie Mae, provides back-end software solutions for the mortgage industry and calculates that roughly 6.8mn of those loans are assumable at a rate of 4 per cent or below, and 4.8mn have rates of 3.5 per cent or less. According to the government-sponsored enterprise Freddie Mac, the average US 30-year fixed mortgage rate for a newly originated loan from Jan-May 2025 was 6.81 per cent.

Canny buyers are alert. Housing and Urban Development department data on the number of FHA-backed mortgages that have been assumed showed a 127 per cent increase from 2021 to 2024. The numbers are low -- 5,861 in 2024 -- for now.

A number of start-ups have emerged to help connect would-be buyers keen to secure assumable loans and homeowners sitting on properties with mortgages that offer a market-defying appeal. Take Roam, the service on which Atlanta-based agent Hosner relies. It was founded by Raunaq Singh, a former project manager at digital house flipper Opendoor, in September 2023. He presents it as concierge service with a fee of 1 per cent of the sale price. "It's free to use our service to find the home, and make an offer -- we only make money if we close," he says.

It's the vast majority of my business -- every person that's a happy customer with a 2.5 per cent mortgage? They tell 10 friends

It's just as appealing to sellers as to buyers, posits Singh. Roam asked homeowners with mortgages of 4 per cent or lower for their primary reason for their staying put; 77 per cent cited low mortgage rates. Roam helps them to find other properties with an attractive interest rate. Historically, Singh continues, it has been hard to cross-reference mortgage data with sales listings in the US, but Roam has a country-wide database of homes for sale with an attached loan. Those searching can filter for particular rates and downpayments, too.

San Diego, California-based RetroRate, launched in the middle of last year, operates on a different model, explains co-founder Andy Taylor, who used to run the product team at real estate brokerage Redfin. A tool for agents, it puts the power in their hands to "guide the consumer to find homes they didn't think they could find on their own", he says. "There is 6 to 10 times [more] inventory with assumable loans you can find on our database" versus industry-standard listings like Zillow, he says. An agent who searches for a home on RetroRate's database and secures a buyer for that property will then bill $2,500 to the buyer at closing, tacking it on as another line item for services around the sale, such as appraisals. Sellers can also pay $50 to RetroRate to ensure that a home's assumable mortgage is prominently displayed on databases such as the MLS, or Multiple Listing Service, the series of databases which collates all homes for sale in the country, and which agents use like Google for real estate.

Another new entrant is Assumable.io, a San Antonio, Texas-based company co-founded by Ryan Carrillo in summer 2023. He learnt about assumable mortgages through an army veteran friend with a VA-backed loan. "The lock-in effect is real," Carrillo says of the rationale behind his start-up. Assumable.io has built its own database, too, and charges users $19 per month to access it; on average they retain paying customers for around five months, says Carrillo.

But while assumable evangelists trumpet it as a simple fix in the new, pricier homebuying landscape, there are challenges. The biggest is equity shortfall. Just as rates have risen over the past five years, so have house values. Tracking by the Federal Reserve Bank of St Louis, for example, shows a price rise of 45-55 per cent in total over the past five years; over the past decade, prices have almost doubled. Zillow reports an increase of 45.3 per cent since 2020, a rise that typically would take at least 10 years to achieve. This means that the assumable mortgage covers a much lower proportion of the value of the home. It creates a large gap to fill to conclude any transaction -- in other words, the remainder of the sale price to pay.

People who think that an assumable can close in 30 days and is no big deal? The answer is no. You have to go through the same approval process, credit and income wise

For those needing to secure extra financing, a secondary loan will impact the overall rate, often significantly, says Melissa Cohn, regional vice-president of William Raveis Mortgage, who has spent more than four decades in the industry. Take a theoretical purchase of a $600,000 home, she suggests, with a $300,000 assumable mortgage. With a standard 10 per cent downpayment, that leaves $240,000 to finance, typically via a Heloc loan (Home Equity Line of Credit). "They're based over the rate of prime, so that portion could be at 9 per cent, which makes for a much higher blended combination. You might be better off taking a new mortgage at 6 per cent for the whole balance," Cohn explains, adding: "There are some lenders that offer home equity loans to go behind assumable, but not all assumables allow you to take a Heloc on closing."

Roam's Raunaq Singh counters that his company will help navigate such situations. "A lot of people need a little extra breathing room, a little extra bridge financing," he says. RetroRate's Andy Taylor also says that the headline data for housing price rises conceals that many hotspots for assumable mortgages have seen softer increases. "South-east Florida? Much of it has depreciated," Taylor claims, "So, there are some areas where assumable loans make a lot more sense."

Taylor's point also suggests another quirk of assumable mortgages. Their geographic spread is uneven. Most of these properties are in the Sun Belt, from the south-west to the south-east, says Assumable.io's Carillo -- there are clusters, in particular around military bases, such as San Antonio, Texas. Carrillo also says the VA loans map where army vets choose to retire, making Florida a hotspot. Most suburban sites in the major metro areas across the US, Carrillo continues, will also have FHA loans aplenty.

But he notes that those handing on a VA-backed loan also need to be wary; if the buyer would not qualify for a VA-originated loan themselves, the seller's entitlement will be impacted should they apply for another VA mortgage for their new home. This deters some sellers.

Paperwork around assumable mortgages can be onerous. "People who think that an assumable can close in 30 days and is no big deal? The answer is no. You have to go through the same approval process credit and income wise -- it isn't necessarily faster and in some cases can take much longer [than an originated loan]," says Cohn.

Roam's Singh says that a seller might have to wait 150-180 days to close -- he says Roam can help reduce this to 30-45 days. Third-party lenders handling the transfer can be loath to prioritise these loans, too, because they're less profitable -- originating a $400,000 loan could earn a lender around $9,000 in closing fees, but for an assumption of an FHA loan, fees are capped at $1,800.

Perhaps the biggest barrier, though, is awareness. It was so hard for agents to grasp this concept when Carrillo launched his start-up that he began a subsidiary business to educate about the assumable mortgage market. "The buyers and sellers got it, but the agents were the stymie to any kind of growth," he says, "They were the friction point." The added red tape and impression that assumable sales would be slower deterred many brokers from embracing them, at least until now.

Hosner was an early adopter and he says the lower awareness can have inadvertent upsides. Take two similar homes, both priced at $400,000 but one with a 2.5 per cent assumable mortgage attached. "It's better value, because we're buying the interest rate as much as the loveliness of the home," he says. "But most sellers haven't yet realised that they could be pricing that property at a 10-15 per cent premium, even in a buyer's market."

The market-defying appeal of assumable mortgages