Assuming a loan means taking over the seller's mortgage and continuing to make the payments on it. Most loans can't be assumed, because the banks don't allow it. Assumption is available only on FHA and VA loans, which are the minority. ... In both cases, you still have to have good credit to qualify for the loan.

How does an assumption of a mortgage work?

An assumable mortgage allows a buyer to take over the seller's mortgage. Once the assumption is complete, you take over the payments on a monthly basis, and the person you assume the loan from is released from further liability. If you assume someone's mortgage, you're agreeing to take on their debt.

Why is assumption prohibited?

Banks frown on assumption clauses because they write mortgages based on the creditworthiness of the original borrower, not an unknown later buyer. The new owner's ability to repay may be challenging to evaluate, and the bank may be reluctant to take on their risk.