How to Buy a Home at 2.75% in a 6.5% World: The Complete Guide to Assumable Mortgages in Greater Boston

The Greater Boston real estate market in 2026 is facing a dual pressure point: inventory remains painfully tight, and interest rates are hovering near levels that make monthly payments eye-watering for many buyers.

If you're looking to buy in Newton, Quincy, Somerville, or the suburbs, you've likely run the numbers and felt the sticker shock. But what if you could buy a house today and pay for it with a mortgage rate from 2021?

This isn't a gimmick; it's called an assumable mortgage. It's perhaps the most powerful, yet least understood, tool in today's real estate arsenal. It allows a buyer to take over the seller's existing loan—keeping their original interest rate, repayment schedule, and remaining balance.

However, in a high-equity market like Massachusetts, assuming a loan is not simple. It requires cash, patience, and a sophisticated understanding of the process.

Here is the definitive guide to how FHA and VA loan assumptions work in the Boston metro area.

In 99% of real estate transactions, the seller pays off their old mortgage with the proceeds of the sale, and the buyer takes out a brand-new loan at current market rates.

An assumption is different. The original loan does not die. Instead, with the lender's approval, you "step into the shoes" of the seller. You become responsible for their remaining debt at their terms.

While both offer low rates, the rules of engagement differ significantly between the two major government-backed loan types.

1. The FHA Assumption (Common in Dorchester, Lynn, Everett, Framingham)

FHA loans are popular among first-time buyers, meaning they're often attached to starter homes or multi-families in dense metro areas like Dorchester, Everett, Lynn, and Framingham.

| The Massachusetts Catch | Most modern FHA loans have monthly Mortgage Insurance Premiums (MIP) that last for the life of the loan. When you assume the loan, you assume that monthly MIP cost too. It doesn't disappear when you hit 20% equity. |

If assumable loans are so great, why isn't everyone doing them?

In the Greater Boston market, the biggest hurdle is aggressive appreciation. You only assume the remaining balance of the loan. You must pay the seller cash for the equity they've built up between their loan balance and today's purchase price.

The Appreciation Explosion (2020-2026)

Between 2020 and 2026, Greater Boston home prices surged:

• Somerville: +35% ($630k → $850k median)
• Newton: +28% ($1.05M → $1.35M median)
• Quincy: +32% ($550k → $725k median)
• Bedford: +30% ($775k → $1.01M median)

Meanwhile, sellers with low-rate mortgages from 2020-2021 have been paying down principal. This creates a massive equity gap.

Let's look at a real-world scenario in Somerville, one of Boston's hottest urban markets.

The Property

The Math for the Buyer

The Hard Truth

To get that 2.8% rate, you need $230,000 in cash at closing to pay the seller for their equity.

The Monthly Benefit:

• If you got a new loan at 6.5% for $850,000:
• Monthly P&I payment: ~$5,370

• With assumed loan at 2.8% ($620,000) + paid $230k cash:
• Monthly P&I payment: ~$2,520
• Monthly Savings: $2,850

Over 30 years, that's over $1 million in interest savings.

If you have the cash reserves to cover the gap and the patience to see it through, an assumption is a financial home run. Here's how to operate in this niche market:

1. Patience is Mandatory

Timeline Comparison:

Assumptions are deeply bureaucratic and often involve older loan servicing systems. In a competitive, multiple-offer situation (like springtime in Arlington or Melrose), a seller may reject an assumption offer simply because they don't want to wait four months to close.

2. Due Diligence Requirements

Before pursuing an assumption, verify:

• Loan Type: Confirm it's actually FHA or VA (ask for the seller's loan documents)
• Assumability Clause: Most post-1980s FHA/VA loans are assumable, but verify with the servicer
• Remaining Balance: Get exact payoff statement to calculate gap
• Interest Rate: Confirm the actual rate (not just what the seller claims)
• Loan Seasoning: Some lenders require the loan to be "seasoned" (6-12 months of payments) before allowing assumption
• VA Entitlement Status: If VA loan, confirm the seller's entitlement and whether substitution is possible

3. Lender Approval Process

You'll need to qualify with the seller's current loan servicer, not your preferred lender. This means:

• Credit Check: Typically 620+ for FHA, 640+ for VA
• Debt-to-Income Ratio: Usually 43% or lower (including the assumed payment)
• Income Verification: W-2s, tax returns, pay stubs
• Employment Verification: Stable employment history
• Asset Verification: Proof of funds to cover the equity gap
• Assumption Package: Servicers have specific paperwork requirements

• Common Servicers in Massachusetts:
• Pennymac
• Newrez
• Freedom Mortgage
• Navy Federal Credit Union (for VA loans)
• Rocket Mortgage (formerly Quicken)

4. Costs and Fees

While you save on loan origination fees, assumptions still have costs:

• Example: Assuming a $600,000 VA loan:
• VA Funding Fee: $3,000 (0.5%)
• Processing: $900
• Title/Attorney: $3,500
• Total: ~$7,400

Compare to origination costs on a new $600,000 loan: $6,000-$12,000+ in fees.

Finding a home with an assumable mortgage in the Greater Boston area requires a targeted search strategy. Because most traditional platforms like Zillow or Redfin don't have a specific "Assumable" filter, you often have to use specific keywords or specialized tools.

1. Specialized Search Platforms

Several newer companies specifically track assumable loans (FHA and VA) by cross-referencing public records with active listings:

• Roam
• Active in Massachusetts
• Identifies listings with low-rate assumable mortgages
• Handles the assumption process for a fee (typically 1% of purchase price)
• Provides "white glove" service to manage paperwork
• Service Fee: 1% of purchase price ($8,500 on $850,000 home)

• AssumeList
• Subscription-based database
• Flags FHA, VA, and USDA loans regardless of whether listing mentions "assumable"
• Good for finding multi-family homes in Worcester, Lowell, and Brockton
• Can search off-market properties

• Assumable.io
• Claims to have mapped over 7 million FHA/VA loans nationwide
• Filter by "Greater Boston" to see estimated rates and remaining balances
• Shows properties even if not actively listed

2. Manual Keyword Search (Zillow/Redfin/Realtor.com)

You can still find these on standard sites by using the "Keywords" filter. In the Boston metro area, try these specific terms:

• "Assumable"
• "VA loan 2.5%" (or other low rates like 2.25%, 3%)
• "Assume mortgage"
• "FHA assumption"
• "Seller financing" (sometimes coded language)

Pro Tip: Many agents in high-demand towns like Newton, Belmont, or Melrose may not realize a home has an assumable mortgage. If you find an FHA or VA home you love, have your agent call the listing agent and ask:

> "Is there an existing government-backed loan on the property, and is the seller open to an assumption?"

3. Current Greater Boston Market Snapshot (January 2026)

4. Real-World Example: The Quincy Cash-Gap Challenge

A buyer in Quincy recently found a 1,500 sq. ft. colonial listed for $725,000. The seller had a VA loan at 2.5% with a remaining balance of $510,000.

The Win: The buyer would save over $1,200 per month compared to a new 6.1% loan.

The Catch: The buyer needed to provide $215,000 in cash (the equity gap) or find a second mortgage.

The Solution: Since most local banks won't do a second mortgage on an assumption, the buyer ended up using a HELOC (Home Equity Line of Credit) from their current property to fund the difference.

Here's the specific tactical data you need to execute an assumption in the current January 2026 market.

The Comparison: Monthly Savings Breakdown

As of January 4, 2026, mortgage rates in Massachusetts have stabilized slightly but remain significantly higher than pandemic lows.

Annual and Lifetime Savings

On a $500,000 assumed loan at 2.75% vs. new loan at 6.29%:

• Annual Savings: $12,600
• 5-Year Savings: $63,000
• 10-Year Savings: $126,000
• 30-Year Savings (Total Interest Saved): $378,000+

In high-appreciation areas like Arlington or Natick, the gap between the loan balance and the sale price can be $200,000+. If you don't have that in cash, here are the 2026 "workarounds":

Strategy 1: Asset-Based Lending

Companies like Griffin Funding (active in MA) offer loans based on your liquid assets rather than just income.

• How it works:
• Lender looks at your investment accounts, 401(k), IRAs, brokerage accounts
• Can borrow against these assets without liquidating them
• Higher interest rates (typically 7-9%) but short-term
• Used to bridge the gap, then paid off quickly

Example: You have $300,000 in a brokerage account but don't want to trigger capital gains taxes. Asset-based lender extends a $150,000 loan at 8% for 5 years to cover the gap.

Strategy 2: Local Portfolio Lenders

Smaller Massachusetts banks are often more flexible than big banks like Chase or Bank of America. They may consider a "Home Equity Loan" for the purchase if you have a strong relationship or high credit.

• Massachusetts Banks with Flexibility:
• StonehamBank
• Greenfield Co-operative Bank
• Cambridge Savings Bank
• Rockland Trust
• Eastern Bank

Approach: Build a relationship before you need the loan. Open accounts, establish credit history, then approach their private banking division about creative financing for an assumption gap.

Strategy 3: Seller Financing (Second Mortgage)

You can ask the seller to "carry" a second mortgage for part of the gap.

• Example Structure:
• You assume their $500,000 loan at 2.75%
• You pay $100,000 cash at closing
• Seller gives you a 5-year loan for $100,000 at 5% interest (seller note)
• After 5 years, you refinance or pay off the seller note

• Why sellers might agree:
• They get their sale completed faster
• They earn 5% interest (better than savings account)
• They trust the property as collateral
• They want to defer capital gains (installment sale)

Strategy 4: Family Gift Funds

Massachusetts has a strong culture of intergenerational wealth transfer. If family can provide gift funds (properly documented for the lender), this is often the cleanest solution.

• IRS Gift Rules (2026):
• You can receive up to $18,000 per person per year tax-free
• Parents can each give $18,000 = $36,000 total
• If both your parents and in-laws participate: $72,000 total
• Larger gifts require gift tax filing (but often no tax due to lifetime exemption)

Strategy 5: Liquidate Investments (Tax-Aware)

If you have significant assets in taxable accounts, you may need to liquidate to cover the gap. Work with a CPA to:

• Harvest tax losses to offset gains
• Time the sale across two tax years
• Use long-term capital gains rates (lower than ordinary income)
• Consider Qualified Opportunity Zone investments to defer gains

You'll need a team that doesn't "fear" the 90-day paperwork cycle:

Real Estate Attorneys (Assumption Specialists)

• Pulgini & Norton (Braintree/Boston)
• Specifically cited as experts in Massachusetts assumptions
• Handle complex title and conveyancing issues
• Push lender servicing departments to process paperwork
• Website: pulginilegal.com

• Other Recommended Firms:
• Moriarty, Troyer & Malloy LLC (Framingham)
• O'Connor & Associates (multiple MA locations)
• Griffin Law (Worcester)

Real Estate Brokerages with Assumption Experience

• Lamacchia Realty
• Training program for agents on "Assumption Program"
• Help buyers in high-rate environments
• Active across Greater Boston

• Gibson Sotheby's International Realty
• High-end market expertise
• Experience with VA loans near Hanscom AFB

• Redfin (Select Agents)
• Some agents specialize in creative financing
• Ask specifically about assumption experience

Mortgage Servicers (Common in MA)

Most assumptions are handled by the seller's current servicer. Here are the largest with established online portals:

Assumption Search Services

• Roam (withroam.com)
• Full-service assumption concierge
• 1% of purchase price fee
• Handle all paperwork, servicer coordination

• Local Assumption Consultants:
• Assume Loans, Inc. (national, active in MA)
• Local agencies often maintain internal lists of off-market assumable opportunities

Assumable mortgages are not for:

❌ First-time buyers with minimal savings
❌ Buyers who need to finance 95% of the purchase
❌ Anyone in a rush (competitive spring market)
❌ Buyers without strong financial cushion
❌ Those uncomfortable with complex transactions

Assumable mortgages are ideal for:

✅ Buyers with $150,000+ in liquid cash reserves
✅ Buyers using gift funds from family
✅ Buyers who own property and can tap equity (HELOC)
✅ Long-term holders who want to lock in low rates permanently
✅ Financially sophisticated buyers who understand the trade-offs
✅ Buyers targeting areas with high FHA/VA concentration
✅ Veterans who can substitute entitlement (VA-to-VA assumption)

If you're considering an assumable mortgage in Greater Boston and want strategic guidance:

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Last Updated: January 4, 2026 | Market data current as of January 2026 | Always verify loan details with servicer before making offers.