source:
  type: guide
  id: hud-4000-1-ii-n-assumptions
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part II — n. Assumptions
    (08/19/2024)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part II — n. Assumptions
    (08/19/2024).
  coverage_tier: operative
obligations:
- id: hud-4000-1-ii-n-assumptions-full
  canonical_id: hud-4000-1-ii-n-assumptions-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part II — n. Assumptions
    (08/19/2024)
  type: do
  tags:
  - regulator-direct
  - fha
  - hud-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: FHA Single Family Housing Policy Handbook 4000.1, Part II — n. Assumptions
      (08/19/2024)
    source_class: hud-handbook
    source_url: https://www.hud.gov/hud-partners/single-family-handbook-4000-1
    snapshot_id: 8c03836f77f317e1
    fetched_at: '2026-05-23T00:28:40Z'
    content_hash: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: 'n. Assumptions (08/19/2024) i. Definition Assumption refers
      to the transfer of an existing mortgage obligation from an existing Borrower
      to the assuming Borrower. ii. Occupancy Eligibility Requirements If the original
      Mortgage was closed on or after December 15, 1989, the assuming Borrower must
      intend to occupy the Property as a Principal Residence or HUD-approved Secondary
      Residence. If the original Mortgage was closed prior to December 15, 1989, the
      assuming Borrower may assume the Mortgage as a Principal Residence, HUD-approved
      Secondary Residence or Investment Property. iii. Restrictions on Loan-to-Value
      Ratio (A) Investment Property The maximum Loan-to-Value (LTV) for an Investment
      Property assumption is 75 percent. Either the original appraised value or new
      Property Value may be used to determine compliance with the 75 percent LTV limitation.
      (B) HUD-Approved Secondary Residence The maximum LTV for a HUD-approved Secondary
      Residence assumption is 85 percent. Either the original appraised value or new
      Property Value may be used to determine compliance with the 85 percent LTV limitation.
      iv. Processing of an Assumption (A) Initiating Processing The Mortgagee must
      notify HUD via FHA Connection (FHAC) of assumptions: • within 15 Days of any
      change of Borrower; or • within 15 Days of the date the Mortgagee receives actual
      or constructive knowledge of the transfer of ownership. This notification does
      not formally release the original Borrower from personal liability for the mortgage
      Note. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing
      Programs Forward Mortgages 8. Programs and Products - Assumptions (08/19/2024)
      Handbook 4000.1 492 Last Revised: 11/26/2025 (B) Release of Liability The Mortgagee
      must prepare form HUD-92210.1, Approval of Purchaser and Release of Seller,
      thereby releasing the original owner when they sell by assumption to the assuming
      Borrower who executes an agreement to assume the Mortgage and to pay the debt.
      v. Underwriting Review Assuming Borrowers must be underwritten in accordance
      with Origination through Post- closing/Endorsement, except for the following
      sections: • Ordering Case Numbers • Ordering Appraisal • Transferring Existing
      Appraisal • Ordering Second Appraisal • Ordering an Update to an Appraisal •
      Property Eligibility and Acceptability Criteria • National Housing Act’s Statutory
      Limits • Nationwide Mortgage Limits • Underwriting the Property • Underwriting
      the Borrower Using the TOTAL Mortgage Scorecard (A) Exceptions in Case of Transfer
      by Devise or Descent The Mortgagee may process an assumption without credit
      review of the assuming Borrower if the transfer is by devise or descent, or
      other circumstances in which the transfer cannot legally lead to exercise of
      the due-on-sale, such as a divorce in which the party remaining on title retains
      occupancy, and the assuming Borrower can demonstrate that they have made the
      Mortgage Payments for a minimum of six months prior to the date of application
      of the assumption. (B) Exception to Minimum Required Investment The assuming
      Borrower is not required to make a cash investment in the Property. The assuming
      Borrower may assume 100 percent of the outstanding principal balance of the
      Mortgage, subject to the restrictions on LTV ratio for Investment Properties
      and HUD-approved Secondary Residences. (C) Responsibility of Direct Endorsement
      Underwriter The holding or servicing Mortgagee is responsible for the underwriting
      review. The review must be completed by a Direct Endorsement (DE) underwriter
      registered by the Mortgagee in FHAC. Where the holding or servicing Mortgagee
      does not originate Mortgages or is not approved under the Direct Endorsement
      Program, it may have an Authorized Agent perform the review. II. ORIGINATION
      THROUGH POST-CLOSING/ENDORSEMENT A. Title II Insured Housing Programs Forward
      Mortgages 8. Programs and Products - Assumptions (08/19/2024) Handbook 4000.1
      493 Last Revised: 11/26/2025 (D) Use of TOTAL Mortgage Scorecard for Assumptions
      The TOTAL Mortgage Scorecard must not be used for assumptions. The DE underwriter
      must manually underwrite the assumption. vi. Allowable Fees and Charges (A)
      Processing Fee and Other Costs Mortgagees may charge the assuming Borrower a
      processing fee that is reasonable and customary not to exceed a maximum of $1,800.
      The Mortgagee may charge the assuming Borrower other costs in accordance with
      Allowable Charges Separate from Assumption Processing Fees. (B) Interested Party
      Contributions The seller or other Interested Parties may make contributions
      toward the assuming Borrower’s actual closing costs consistent with the requirements
      in Interested Party Contributions. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      A. Title II Insured Housing Programs Forward Mortgages'
  judgment: false
