Mortgage Assumption Agreement Template

MORTGAGE ASSUMPTION AGREEMENT TEMPLATE FAQ

What is a mortgage assumption agreement?

A Mortgage Assumption Agreement is a contract where a new borrower (“Assuming Borrower”) agrees to take over responsibility for an existing mortgage on a property. It typically requires the lender’s approval and confirms the loan balance, interest rate, payment terms, and who remains liable.

Does the lender have to approve a mortgage assumption?

Often yes. Many mortgages have a “due-on-sale” clause that restricts transfers without lender consent. Even if assumptions are allowed, lenders often require an application and written approval. This template includes a lender consent section.

Does the original borrower remain liable?

It depends on the lender and agreement terms. Some assumptions release the original borrower (a “novation” style release), while others keep the original borrower secondarily liable. This template includes options for release vs continued liability.

What should the agreement include?

Include: property address and legal description, original loan details, outstanding balance, assumed payment terms, effective date, lender consent, escrow/tax responsibilities, insurance, default terms, and signatures. This template includes a clear summary section to reduce confusion.

Is this used in divorce or family transfers?

Yes, sometimes. When one spouse keeps the home, they may try to assume the mortgage. However, lenders may require refinancing instead. This template is flexible for family transfers, but lender approval still matters.

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