DUS loan assumption lets the buyer take over the seller's Fannie DUS loan at existing rate and terms, subject to lender consent and buyer underwriting . Assumption fee is typically 1% of balance plus lender legal ($25K-$75K). Buyer must pass standard agency net-worth, liquidity, and experience tests. Closes in 60-90 days.
When loan assumption beats new financing
When valuable: assumption is most valuable when the existing loan rate is materially below current market. On a property with a 4.0% loan in a 6.0% rate environment, the rate differential typically equates to substantial property value, often 5% to 10% of property value depending on remaining term and loan balance.
When less valuable: in environments where current rates are below the existing loan rate, assumption is generally not pursued, because the buyer would prefer to refinance into a new loan at lower current rates.
Process: buyer applies through the existing DUS lender (or an approved DUS lender willing to handle the assumption). Underwriting tests buyer's net worth, liquidity, multifamily experience, and key principal designation against the same agency standards as a new loan. Lender legal reviews loan documents for assumability and prepares the assumption agreement.
Costs: assumption fee typically 1% of balance, sometimes negotiable to 0.50% to 0.75% on competitive deals or with strong relationship sponsors. Lender legal $25K to $75K. Title and recording costs additional. Total typically 1.25% to 1.75% of balance, materially less than full new-loan origination cost.
Negotiation lever at sale: a sponsor selling a property with an attractive existing loan should price the loan-assumption value into the asking price. Marketing materials should highlight the loan terms; LOIs should commit to a path on assumption or refinance with corresponding deposit and timeline mechanics.
Sources
- Delegated Underwriting and Servicing (DUS) program disclosures · Fannie Mae · current
- Optigo lending program disclosures · Freddie Mac Multifamily · current