Can You Take Over a Seller's Mortgage in North Texas? Assumable Loans, Seller Financing and Wraps Explained

by Rise Realty

By Rise Realty Texas · Reviewed by Kelly Bishop, Broker
Published November 3, 2026

Yes, if the seller has the right kind of loan. A qualified buyer can usually assume an FHA, VA or USDA mortgage and keep the seller's existing rate. Most conventional fixed-rate loans can't be assumed. If an assumption isn't possible, seller financing is another path, and Texas has specific rules for it, especially when the seller's own loan stays in place.

The timing explains the interest. Freddie Mac's average 30-year fixed rate was 7.32% for the week of October 22, 2026. Meanwhile, 49.1% of outstanding U.S. mortgages carry a rate under 4%. For buyers shopping McKinney, Anna, Celina, Van Alstyne, Sherman or Denison, a seller's low-rate loan can change the math on a home, if it can be assumed. Here's how each option works.

How big is the gap between existing mortgage rates and new ones?

Large. In the second quarter of 2026, 49.1% of outstanding U.S. mortgages carried a rate under 4%, while Freddie Mac's 30-year fixed average was 7.32% for the week of October 22, 2026. The Federal Housing Finance Agency's National Mortgage Database, as analyzed by Realtor.com, shows how many homeowners with a mortgage are still paying a rate from the low-rate years.

Share of outstanding U.S. mortgages by interest rate (Q2 2026) compared with the current new-loan average
Existing loan rate	Share of mortgages
Under 3%	19.2%
Under 4% (cumulative)	49.1%
Under 5% (cumulative)	65.6%
6% and up	22.5%
Freddie Mac 30-year fixed average, week of Oct. 22, 2026	7.32%

Source: FHFA National Mortgage Database via Realtor.com (Q2 2026, by loan count); Freddie Mac Primary Mortgage Market Survey. These are national figures, and Texas-level shares weren't part of the release. Realtor.com notes the latest quarter is a first print that is typically revised upward by about 1%, mostly in the 5% and higher ranges.

Which home loans can a buyer assume?

FHA, VA and USDA loans can generally be assumed by a qualified buyer, and most conventional loans can't. Every assumption still requires approval from the lender or agency, so a buyer can't simply start making the seller's payments.

FHA: Assumable. For loans closed on or after December 15, 1989, HUD requires the buyer to qualify, and private investors can't assume them.
VA: Assumable by veterans and non-veterans who qualify. VA charges a funding fee on assumptions, so check VA's current fee schedule. The seller's entitlement stays with the loan unless an eligible veteran buyer substitutes their own.
USDA guaranteed: Assumable when the buyer meets USDA eligibility. The lender must get USDA approval before it consents to the transfer.
Conventional: Most fixed-rate conventional loans aren't assumable. Their due-on-sale clause lets the lender require payoff when the home sells.

A practical tip: ask the listing agent what type of loan the seller has. Loans made from July 2019 through June 2022 make up 42.8% of outstanding U.S. mortgages, a period that included record-low rates. That figure covers every loan type, though, and most conventional loans can't be assumed. Only the FHA, VA and USDA loans from those years are candidates.

What does it take to close an assumption in Collin or Grayson County?

Approval from the seller's servicer (and USDA, for USDA loans), plus cash or financing for the equity gap. The gap is the sale price minus the loan balance the buyer takes over. A higher price or a lower balance changes the cash a buyer needs, so ask for the payoff balance early.

North Texas listing snapshot, September 2026
Market	Median listing price, Sep 2026	Median listing price, Sep 2025	Median days on market, Sep 2026
Collin County	$517,500	$522,500	65
Grayson County	$344,450	$354,925	78
Dallas-Fort Worth-Arlington metro	$422,495	$425,000	Not shown

Source: Realtor.com Housing Inventory data via FRED. Listing prices, not sold prices.

What this means in practice: median listing prices were slightly lower than a year earlier in both counties, and the median listing had been on the market 65 days in Collin County and 78 in Grayson County. Sellers with an assumable loan have a selling point to advertise, and buyers have time to ask questions. Ask the servicer for its review timeline, and build that time into your option period and closing date. See how these numbers compare with the rest of the area in our county-by-county buyer leverage breakdown, and what buyers are negotiating in this look at North Texas negotiation data.

Sellers: ask for a release of liability in writing. For FHA loans closed on or after December 15, 1989, HUD's rules require the lender to prepare a release when a creditworthy buyer assumes the debt. VA sellers should confirm what happens to their entitlement before signing.

How does seller financing work in Texas?

The seller lends the buyer all or part of the price, and the buyer repays the seller under a note secured by the home. In Texas contracts, this is documented with TREC's Seller Financing Addendum (TREC No. 26-8). Sellers who own the home free and clear or have substantial equity are the most likely to offer it.

Seller financing is regulated. Federal and Texas rules limit how many sales an owner can finance before licensing and loan-originator requirements apply, and the limits differ from rule to rule. A seller who may finance more than one sale should talk with a Texas attorney first.

A buyer who gets a contract for deed (an executory contract) instead of a deed at closing has specific protections under Chapter 5 of the Texas Property Code. One example: the seller must record the contract, with its required disclosure statement, within 30 days of signing it.

What is a wrap mortgage, and what does Texas require?

A wrap is seller financing layered on top of the seller's existing loan. The buyer pays the seller, and the seller keeps paying the original lender. Texas requires a wrap lender to give the buyer a written disclosure at least seven days before the agreement is signed, and the buyer can rescind within seven days of receiving it.

Texas Finance Code Chapter 159 also has licensing and registration requirements for wrap lenders, with exemptions that include owners who make only a small number of wrap loans in a year. Whether an exemption fits a particular seller is a question for a Texas attorney.

What is the Section 5.016 lien notice, and when does a Texas seller have to give it?

Texas Property Code Section 5.016 can require a seller who conveys a home that will stay subject to a recorded lien to give the buyer and each lienholder written notice at least seven days before the contract is signed or the sale takes effect. The notice must warn that the lienholder could demand full payment of the loan. The section has exceptions, including when the buyer obtains a title insurance policy on the transfer and for transfers to a spouse or relative. If a required notice isn't given, the buyer can terminate the contract within seven days of receiving it, though the sale itself isn't invalid.

That warning matters because federal law (12 U.S.C. 1701j-3) lets lenders enforce due-on-sale clauses, with limited exceptions such as a transfer that makes the borrower's spouse or children an owner, or a transfer into a living trust where the borrower stays a beneficiary. A sale to an outside buyer isn't one of them. The same risk applies to “subject-to” deals, where a buyer takes title and the seller's loan stays in the seller's name.

Frequently asked questions

Are FHA loans assumable in Texas?

Yes. FHA loans closed on or after December 15, 1989 are assumable by a buyer who passes HUD's credit review. Private investors can't assume them.

Can a non-veteran assume a VA loan?

Yes, with approval. The seller's VA entitlement stays tied to the loan unless the buyer is an eligible veteran who substitutes their own.

Are USDA loans assumable?

Yes. A USDA guaranteed loan can be assumed when the buyer meets USDA eligibility. The lender must get USDA approval before it consents to the transfer.

Is a wrap mortgage legal in Texas?

Yes, but Texas has specific rules. A wrap lender must give the buyer a written disclosure at least seven days before the agreement is signed, the buyer has a seven-day window to rescind, and licensing or registration rules apply with exemptions for some owners. Talk with a Texas attorney before using one.

What happens if a seller doesn't give the Section 5.016 notice?

The sale isn't invalid, but when the notice is required and wasn't given, the buyer can terminate the contract within seven days of receiving it. The section has exceptions, including when the buyer obtains a title insurance policy on the transfer.

How do I find homes with assumable loans in McKinney or Sherman?

Ask your agent to search listings that mention an assumable FHA, VA or USDA loan and to verify the loan details with the listing agent before you make an offer.

The bottom line

Assuming a seller's FHA, VA or USDA loan is one of the few ways to buy below the 7.32% average Freddie Mac reported for the week of October 22, 2026. Seller financing can work when the seller has the equity and follows Texas and federal limits. Wraps and subject-to deals carry legal and due-on-sale risk that calls for an attorney. This article is general information, not legal, tax or lending advice. Confirm any transaction with a Texas-licensed attorney, a tax advisor and a licensed loan officer.

Ask Rise Realty Texas to find homes with an assumable loan

Want to see which North Texas listings come with a loan you could take over? Rise Realty Texas can search Collin, Grayson and nearby counties for listings that advertise an assumable FHA, VA or USDA loan and confirm the details with the listing agent before you write an offer. Call (888) 774-7315 or browse our North Texas community guide. Before you tour homes, read whether you need a buyer agreement to see homes in Texas. To find out whether you'd qualify for an assumption, talk with a licensed loan officer.

Sources

This article is general information about Texas real estate, current as of October 27, 2026. It isn’t legal, tax or financial advice. Talk with a licensed professional about your situation. Rise Realty Texas LLC · TREC #9016637-BB.