The due-on-sale clause is the mechanical reason, but conventional loans are more assumable than their reputation suggests. In an ordinary arms-length sale, a conventional fixed-rate loan typically cannot be handed to the next buyer. The note carries a due-on-sale clause that lets the lender call the balance when the property transfers, so the buyer brings a new loan and the old one gets paid off. FHA, VA, and USDA loans are assumable by design, with the buyer qualifying through the servicer. Two conventional exceptions worth knowing: - Family and life-event transfers. Under federal law (Garn-St Germain) and both Fannie Mae's and Freddie Mac's servicing rules, a divorce or legal separation, a death, or a transfer to a spouse or child allows the remaining party to assume and continue the existing loan at the existing rate. Getting the departing borrower released from liability requires the assuming party to qualify on credit and income. If anyone tells you a conventional loan cannot be assumed in a divorce, they are wrong; both agencies allow it. - Adjustable-rate mortgages. Agency ARMs are generally assumable, though some plans only allow it after the initial fixed period, so the specific note controls. Why any of this matters is timing. When rates on new loans sit well above an existing low-rate loan, an assumable FHA or VA mortgage can be worth real money to a buyer, and the arms-length version of that option lives almost entirely in the government programs. The catch: the buyer has to cover the seller's equity in cash or with a second loan, so it is a fit for a narrower group than the headline suggests. Confirm the assumption rules on any specific loan with the servicer, since terms vary note by note.