How to Get a 3% Mortgage Rate on Your Rental Property (Still Works in 2026)

Summary of How to Get a 3% Mortgage Rate on Your Rental Property (Still Works in 2026)

by BiggerPockets

25m•May 27, 2026
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Overview of How to Get a 3% Mortgage Rate on Your Rental Property (Still Works in 2026)

Ashley and Tony break down assumable mortgages—a lesser-known way for buyers to take over a seller’s existing mortgage rate instead of taking out a new loan at today’s higher rates. The episode focuses on how this strategy can be especially powerful for real estate investors, since assuming a low-rate loan can dramatically improve cash flow. They explain which loans are assumable, how the process works, how to handle the equity gap, where to find these deals, and the biggest pitfalls to watch for.

What an Assumable Mortgage Is

An assumable mortgage lets a buyer step into the seller’s existing loan with the same:

  • Interest rate
  • Remaining balance
  • Loan term
  • Lender/servicer

Instead of resetting to current market rates, the buyer inherits the seller’s loan terms. In the episode’s example, swapping a ~3% mortgage for a ~6.5% new loan could save roughly $900 per month—a huge difference for a rental property’s cash flow.

Why it matters for investors

  • Lower monthly payments can turn a bad deal into a profitable one
  • It can save tens of thousands of dollars in interest over time
  • Closing costs are often lower than a brand-new mortgage

Which Loans Are Assumable

The main assumable loan types discussed are:

  • FHA loans
  • VA loans
  • USDA loans

FHA loans

  • Very common for first-time homebuyers
  • Typically allow low down payments
  • Generally assumable if the buyer qualifies
  • Approximate qualification: 580+ credit score and DTI under ~50%
  • Important caveat: FHA loans originated after 2013 usually have mortgage insurance for the life of the loan

VA loans

  • Non-veterans can assume VA loans
  • You do not need military service to take over the loan
  • Approximate qualification: 620+ credit score is common, though some lenders may allow lower depending on profile
  • Seller caveat: if a non-veteran assumes the loan, the seller’s VA entitlement stays tied up until the loan is paid off or refinanced

USDA loans

  • Assumable, but must be used as a primary residence
  • Not for investment-only properties
  • Approximate qualification: 640+ credit score
  • Best suited to owner-occupants or house hacking scenarios

Conventional loans

  • Almost never assumable
  • Often blocked by a due-on-sale clause
  • This is why conventional loans are usually pursued through other strategies, like sub-to, rather than assumption

The Equity Gap: The Biggest Challenge

The biggest issue with assumable mortgages is that you’re assuming the remaining loan balance, not the full purchase price.

Example

  • Home value: $450,000
  • Remaining loan balance: $320,000
  • Equity gap: $130,000

That $130,000 has to be covered somehow, because the seller still expects to be paid for the full value of the home.

Common ways to cover the gap

  1. Bring cash to closing

    • Simplest option, but requires significant liquidity

  2. Get a second mortgage

    • You assume the low-rate first mortgage and borrow the gap separately
    • The key is to calculate the blended interest rate across both loans
    • Even if the second loan is expensive, the combined rate may still be attractive

  3. Seller financing

    • The seller carries part of the equity gap as a private loan
    • Can be especially useful for motivated sellers or homes that have been sitting on the market

Best sweet spot for deals

  • Sellers who bought in 2020–2022
  • Properties in markets with moderate appreciation
  • Homes where the owner didn’t put much down or hasn’t built too much equity

How to Find and Close on an Assumable Loan

The hosts emphasize that many sellers and agents don’t even know their mortgage is assumable, so this can be a major advantage for informed buyers.

Step-by-step process

  1. Find a property with an assumable loan

    • Tools mentioned: Roam, Assumelist, Assumable.io
    • You can also use platforms like PropStream to identify FHA/VA/USDA loans

  2. Confirm assumability with the servicer

    • The seller must initiate the request
    • The servicer confirms the loan can be assumed and provides the current balance

  3. Make an offer with an assumption contingency

    • Your offer should be contingent on being approved to assume the loan

  4. Apply directly with the current servicer

    • You don’t shop for a new lender
    • You submit a normal underwriting package: pay stubs, tax returns, bank statements, credit pull, etc.

  5. Underwriting and approval

    • Servicer reviews your finances and may request an appraisal in some cases
    • Timeline can be 45 days, but often 60–90 days

  6. Close the deal

    • You sign assumption documents
    • The seller is released from the mortgage
    • The loan now appears on your credit report

Closing costs

  • Often lower than a new mortgage
  • FHA assumption fee can be up to $1,800
  • VA assumption fee is typically 0.5% of the remaining balance, plus small processing fees

Risks, Delays, and Things to Watch

The episode is optimistic about the strategy, but also stresses that it’s not always easy.

Main drawbacks

  • Slow process: assumptions can be frustrating and time-consuming
  • Backlogs: some servicers have long queues
  • Need to follow up constantly: buyers should stay proactive and keep the process moving
  • Equity gap can kill the deal if not accounted for properly
  • Not all assumptions are good deals: if the blended rate creeps too high, the benefit may disappear

Important reminders

  • USDA assumptions are not for investment properties
  • Don’t fall in love with the rate without running the full math
  • Always evaluate:
    • Equity gap
    • Blended rate
    • Cash needed at closing
    • Cash-on-cash return

Key Takeaways and Action Items

Main takeaways

  • Assumable mortgages can let you inherit a seller’s low rate, potentially saving hundreds per month
  • The best opportunities are usually FHA and VA loans
  • Conventional loans are generally not assumable
  • The equity gap is the biggest hurdle
  • Patience and persistence are essential

Action items for investors

  • Search properties on Roam, Assumelist, and Assumable.io
  • Ask agents and sellers what kind of mortgage the property has
  • Work with an agent who understands assumptions and seller financing
  • Run the numbers on every deal, including the blended rate
  • Be prepared for a longer closing timeline
  • Follow up directly with servicers rather than waiting passively

Final recommendation

If you can find an assumable mortgage with a manageable equity gap, the strategy can be a major edge in a high-rate market—especially for investors focused on cash flow.