More Assumable Loans Available

Three states now require conventional mortgage lenders to allow assumptions when divorcing co-owners want to keep the family home at the existing rate and remaining term.

I am happy to say that Maryland led the way! Effective October 1, 2025, HB 1018 requires mortgage lenders to include a provision permitting a borrower (following a divorce decree awarding them the property) to assume the loan, provided they qualify. It applies to all conventional loans. FHA and VA already allow assumptions. And, most significantly, the statute applies retroactively to conventional home mortgages entered into before the effective date.

Now, Virginia has followed. Under HB 304, effective July 1, 2026, conventional loans must include essentially the same language required in Maryland.

The impact of this requirement is enormous for our divorce clients. Although many lenders already allowed assumptions due to divorce, clients could not count on that when negotiating their Marital Separation Agreements. Now in Maryland and Virginia, they will be able to feel more certain that they will be able to assume the existing mortgage as long as they qualify. Many people still have the low-interest-rate mortgages we did in 2020, 2021, and early 2022. Assuming this loan is the only way one person can afford the marital home, because refinancing would be at a much higher rate and payment.

We are still available to talk with clients going through separation and divorce about whether they will qualify to assume their existing mortgage and options for funds for an equity buyout. Please contact us with any questions.