Could You Lock in a 3% Mortgage in 2026?
Most buyers in 2026 are facing mortgage rates around 6%. But what if you could purchase a home in Hawaii and take over a seller’s existing 3% mortgage instead?
It’s possible — through something called an assumable loan.
At Locations, we’re seeing growing interest in this strategy as buyers look for creative ways to improve affordability. Here’s what you need to know.
What is an Assumable Mortgage?
An assumable mortgage allows a buyer to assume, or take over, the seller’s existing home loan. This includes the seller's:
- Remaining loan balance
- Interest rate
- Repayment schedule
- Loan terms
If the seller secured their mortgage during the low-rate years of 2020–2022, that rate could be dramatically lower than what lenders are offering today. For example, assuming a seller's rate of 3% when current market rates are around 6% could potentially save you hundreds, or even thousands, of dollars a month. That’s why assumable loans are gaining attention in 2026.
Why Assumable Mortgages Matter in 2026
We’re in an unusual housing cycle where millions of homeowners locked in historically low rates several years ago. That means buyers today have an opportunity that rarely exists: Access to yesterday’s interest rates in today’s market. For the right buyer, assuming a mortgage can be one of the smartest financial moves available.
Which Loans Are Assumable?
Not all mortgages qualify. Most conventional loans cannot be assumed. The majority of assumable loans come from government-backed programs, including:
- Federal Housing Administration (FHA loans)
- Department of Veterans Affairs (VA loans)
- USDA rural development loans
These programs allow assumptions because they’re designed to expand homeownership access.
How to Qualify for an Assumable Mortgage
Even though you’re taking over an existing loan, you don’t automatically inherit it. The lender still needs to confirm that you’re financially qualified to step into the seller’s mortgage. In most cases, the standards are very similar to applying for a brand-new home loan.
Here’s what lenders will typically review:
- Credit score
- Income
- Debt-to-income ratio
- Employment history
For VA loans, there may be additional eligibility requirements related to military service, though non-veterans can sometimes assume VA loans with lender approval (this varies by situation).
How the Process Works
The process to obtaining an assumable loan is different from a typical purchase mortgage.
Step 1: Find a home with an assumable loan
Not every listing will advertise this, so working with a knowledgeable agent matters. Your Locations agent can help you find a home with an assumable loan or help to negotiate an assumable loan from a seller.
Step 2: Apply with the seller’s lender
You must qualify with the current loan servicer, not a new bank. You would apply directly with the seller’s loan servicer and submit your financial documentation. The seller's lender would then evaluate your qualifications.
Step 3: Cover the equity gap
If the seller owes $400,000 but the home is worth $550,000, you must bring or finance the $150,000 difference separately. This may involve cash, a second mortgage, or combination of both. Creative structuring is often necessary.
Step 4: Close and transfer the loan
Once approved, the loan transfers into your name with the same rate and terms. At that point, the mortgage is officially yours.
The Biggest Advantages for Buyers
Lower Interest Rate
This is the headline benefit: You could potentially save tens or even hundreds of thousands over the life of the loan. A lower rate means that you will pay less interest over time and more of your payment will go toward the principal, giving you greater long-term savings.
Lower Monthly Payment
Improved affordability can also expand your buying power. That can could look like more room in your budget, giving you the ability to afford a higher-priced home. For many buyers, this is the difference between stretching their budgets and being “comfortable.”
Less Exposure to Market Volatility
Instead of being tied to current market rates, you’re stepping into a loan created during a lower-rate cycle. You’re essentially accessing yesterday’s financing in today’s market, insulating yourself from current rate swings.
Potential Challenges (What Buyers Need to Know)
Assumable mortgages aren’t automatic wins. There are important considerations.
The “Equity Gap”
You’ll need cash or additional financing. This is the biggest hurdle. For example, if the seller owes $400,000 on the loan and the home value is $550,000, the buyer will need to pay the difference of $150,000—either in cash or through a second loan. This means assumable loans tend to work best for buyers who have strong savings or equity from selling a previous home, and can structure creative financing.
Not Every Home Has One
Most conventional loans are not assumable. The majority of assumable mortgages come from government-backed loan programs. Because inventory is limited, partnering with a knowledgeable agent is key.
Approval Can Take Longer
You must qualify with the seller’s current loan servicer. This can sometimes mean more paperwork, longer processing times and additional underwriting review. Patience and good communication are necessary.
You Still Have to Qualify
Even though you’re taking over an existing loan, the lender will still review your credit score, income and employment history, debt-to-income ratio and overall financial stability. For VA loans, there may be additional service-related eligibility requirements. In some cases, non-veterans can assume a VA loan, but lender approval is required.
Is an Assumable Mortgage Right for You?
Assumable loans tend to work best for buyers who:
- Have strong savings or equity from a previous sale
- Plan to stay in the home long-term
- Want to maximize affordability despite higher rates
Why Assumable Loans Are Gaining Attention in Hawaii
Hawaii’s housing market is unique. Many homeowners purchased or refinanced during historically low-rate periods in 2020–2022. That means some properties across Oahu and the neighbor islands may carry mortgage rates in the 2–3% range, significantly lower than current market rates.
Because inventory is limited and turnover tends to be lower than many mainland markets, assumable opportunities are not abundant. However, when they do appear, they can create a competitive edge for qualified buyers.Working with a knowledgeable agent can help identify when an assumable option may exist.
Curious whether an assumable loan could work for your home search?
Let a Locations agent run the numbers for you. Your agent can also alert you when a property with an assumable mortgage hits the market. The right strategy can make a meaningful difference—and in today’s market, strategy matters more than ever.
