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Are FHA Loans Assumable?

Sarah Sharkey2-minute read

November 28, 2022


FHA loans are government-backed home loans from the Federal Housing Administration that can come in handy if your credit scores and cash reserves are on the lower side. You may be out and about house hunting and discover a foreclosed property that piques your interest. Can you use an FHA loan to purchase it? In short, the answer is yes! Let’s take a closer look at how you can buy a foreclosed home with an FHA loan as well as the pros and cons.

Can FHA Loans Be Used For Foreclosures?

Yes, you can buy a foreclosed property with an FHA loan, as long as the home is in livable condition.

However, using an FHA loan as a means through which to purchase a foreclosure may create other difficulties that can put you at a disadvantage if you’re competing with all-cash buyers with no appraisal or inspection concerns.

Pros And Cons Of Using An FHA Loan To Buy A Foreclosure: At A Glance



Low down payment

Must meet livability standard

More lenient credit score

Sold as is

Less stringent qualifications

More competition

Today's Purchase Rates

FHA 30-Year Fixed *

5.99 Rate / 7.092 APR

Legal Disclosures

  • 30-year FHA Fixed-Rate Loan: An interest rate of 5.99% (7.092% APR) is for the cost of 2.00 Point(s) ($4,070.00) paid at closing. On a $203,500 mortgage, you would make monthly payments of $1,351.37. Monthly payment does not include taxes and insurance premiums. The actual payment amount will be greater. Payment assumes a loan-to-value (LTV) of 74.91%. Payment includes a one-time upfront mortgage insurance premium at 1.75% of the base loan amount and a monthly mortgage insurance premium (MIP) calculated at 0.8% of the base loan amount. For mortgages with a loan-to-value (LTV) ratio of 74.91%, the 0.8% monthly MIP will be paid for the first 11 years of the mortgage term. Thereafter, the monthly loan payment will consist of equal monthly principal and interest payments until the end of the loan.


  • Listed rates are offered exclusively through Rocket Mortgage.
  • Mortgage rates could change daily.
  • Actual payments will vary based on your individual situation and current rates.
  • Some products may not be available in all states.
  • Some jumbo products may not be available to first time home buyers.
  • Lending services may not be available in all areas.
  • Some restrictions may apply.
  • Based on the purchase/refinance of a primary residence with no cash out at closing.
  • We assumed (unless otherwise noted) that: closing costs are paid out of pocket; this is your primary residence and is a single family home; debt-to-income ratio is less than 30%; and credit score is over 720; or in the case of certain Jumbo products we assume a credit score over 740; and an escrow account for the payment of taxes and insurance.
  • The lock period for your rate is 45 days.
  • If LTV > 80%, PMI will be added to your monthy mortgage payment, with the exception of Military/VA loans. Military/VA loans do not require PMI.
  • Please remember that we don’t have all your information. Therefore, the rate and payment results you see from this calculator may not reflect your actual situation. Rocket Mortgage offers a wide variety of loan options. You may still qualify for a loan even in your situation doesn’t match our assumptions. To get more accurate and personalized results, please call to talk to one of our mortgage experts. 
View Rates

What Are The Pros And Cons Of Buying Foreclosures With An FHA Loan?

As with any other form of real estate financing, there are both advantages and disadvantages of using an FHA loan to buy property foreclosures. You’ll find several of the most common upsides and downsides of FHA foreclosure buying outlined below.


  • Low down payment: FHA loans generally come with low down payment requirements attached, as low as 3.5% down.

  • Less-stringent qualifications: First-time home buyers with less-than-ideal credit and low cash reserves may find that FHA loans offer a helpful starting point through which to pursue the dream of homeownership.


  • What you see is what you get: Be advised that foreclosure properties are sold as is, meaning that the current owner – the original mortgage lender – will undertake no repairs or provide any warranties as to the condition of the property. Note that this means that buyers are responsible for all needed repairs and maintenance on the property.

  • Bargains mean competition: Unfortunately for prospective homeowners, the prospect of real estate bargains can attract investors…and in swarms. Many of these competitors will be seeking to buy with all-cash offers, which makes any offer including financing of any kind less competitive.

  • Slower sales process: Because of their eligibility requirements, and the extensiveness of the qualification process, FHA loans can also be slower to process than conventional loans from application to closing.

Where Can I Find Foreclosures For Sale?

On the hunt for a foreclosure? We don’t blame you: It’s often a great way to score a bargain on a piece of property that has tremendous potential. Happily, you can find plenty of foreclosures posted up for sale on most major real estate listing sites. Other avenues through which to seek out and find foreclosures to buy include browsing through the HUD Home Store, Fannie Mae’s HomePath and Freddie Mac’s HomeSteps.

The Bottom Line: An FHA Loan Can Help You Buy A Foreclosure

FHA loans are can help with the purchase of foreclosures. At the same time, the foreclosed property that you’re considering must also be livable and depending on an FHA loan can put you at a competitive disadvantage when stacked up against all-cash buyers. If the home that you’re thinking about purchasing is not livable, you’ll need to consider leveraging an FHA 203(k) loan (note that Rocket Mortgage does not offer this type of loan) as an alternative.

Thousands of satisfied home buyers already turn to FHA loans as a helpful means through which to finance the purchase of foreclosed properties every year. Ready to get your own FHA loan approval started? Our online application process is always open.

Get approved to see what you can afford.

Rocket Mortgage® lets you do it all online.

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Sarah Sharkey

Sarah Sharkey is a personal finance writer who enjoys diving into the details to help readers make savvy financial decisions. She’s covered mortgages, money management, insurance, budgeting, and more. She lives in Florida with her husband and dog. When she's not writing, she's outside exploring the coast. You can connect with her on LinkedIn.