What types of loans may be assumable under the law?

FHA (Federal Housing Administration) and VA (Department of Veterans Affairs) loans are specifically designed to be assumable under the law. This means that a buyer can take over the existing mortgage from the seller, keeping the same terms and conditions of the loan. Assumability helps to facilitate the sale of homes as it offers more options for buyers, especially when interest rates rise.

FHA loans allow for easier access to homeownership, particularly for first-time buyers, and by making these loans assumable, the FHA program encourages stability in home sales. Similarly, VA loans provide valuable benefits to eligible veterans and military personnel, and their assumable nature can make it easier for these individuals or their families to buy homes.

In contrast, while some conventional loans have an assumable feature, it is not universally applicable. Many fixed-rate loans and high-interest loans do not typically allow for assumption, as this can involve different underwriting standards and eligibility checks. Therefore, the correct understanding focuses on FHA and VA loans, as they are explicitly designed to support the assumability of mortgages.