Loan Assumption Addendum

Buyer Resources/Contracts & Addenda

Loan Assumption Addendum

Taking over the seller’s loan.

Some loans, often FHA and VA, can be assumed, letting you take over the seller’s existing loan and interest rate. The Loan Assumption Addendum sets the terms when you do.

What the Addendum Covers

Your approvalThe sale can be contingent on you qualifying for the assumption no later than 3 days before closing.

Reviewing the loanYou approve the loan’s terms within an agreed number of days after acceptance or receipt of the terms.

Mortgage insuranceIf the loan includes mortgage insurance, you assume it and pay it too.

Loan detailsLoan type, current rate, payment, approximate balance, original date and term.

The differenceAny gap between the price and the loan balance is covered by your cash down payment or another agreed method.

Costs & impoundsThe addendum says who pays assumption and transfer fees. The seller brings impound accounts current, prorated at closing.

Risks Both Sides Should Understand

Seller liability

Unless the lender releases the seller in writing, the seller may stay liable if the buyer later defaults. The sale can be made contingent on that release.

“Due on sale” clause

Some loans let the lender demand full payment when the home is sold, unless the lender gives a written waiver.

Seller credit review

The sale can be contingent on the seller approving your credit, using a credit report and loan application provided within 3 days.

Sample Forms

Blank Arizona REALTORS® samples for reference. We’ll complete the current version together.

Loan Assumption AddendumUpdated Jan 2014 · 2 pagesTerms for taking over a seller’s existing loan.View sample (PDF) →

Unfamiliar term? Browse the Real Estate Glossary →

General information only, not legal advice. Based on the Arizona REALTORS® Loan Assumption Addendum (January 2014); your signed addendum and contract control.