How a HUD loan assumption works

You can buy an apartment property with an FHA-insured loan on it and keep that loan: its note rate, its remaining term and its balance. HUD calls the approval a Transfer of Physical Assets, or TPA. It is not automatic, and it runs on HUD’s schedule, not the purchase contract’s.

Why bother? Because of the rate. The median note rate on HUD apartment loans in HUD’s current file is in the mid-3s, and loans endorsed in the last year carry rates in the mid-5s. Every property page on this site shows what that gap is worth on that loan’s balance.

What HUD is approving

HUD’s asset management handbook (Handbook 4350.1, chapter 13) treats a sale of an insured property, or of a controlling interest in the owner, as a TPA that needs HUD’s consent before closing. The buyer becomes the new mortgagor and signs on to the HUD regulatory agreement that comes with the loan. A sale by deed means a substitution of mortgagors. Some smaller changes in ownership that don’t hand over control can qualify for a lighter, “modified” review.

The application runs on form HUD-92266, the Application for Transfer of Physical Assets. The buyer, the seller and normally the lender sign it. Closing without HUD’s consent breaches the regulatory agreement that comes with the loan.

What the buyer has to show

HUD starts with each principal’s previous participation certification (Form HUD-2530), which covers their record on other HUD-insured and assisted properties. A bad history on another HUD deal can stop the transfer on its own.

Then the property: its physical condition, the balance in the reserve for replacements, and any repairs HUD wants done as a condition of the transfer. Then the buyer’s money: where the equity comes from, and whether the property can carry the existing debt under the new owner’s plan. If the property has a Section 8 contract or a use agreement, those transfer too, with their own consents.

The math a buyer should run first

Take the balance the buyer would assume, not the price. On the property pages here, that is HUD’s amortized balance as of the file date.

A worked case: a property listed at $30 million with a $19.6 million HUD loan at 2.75% and 32 years left. At 2.75%, principal and interest on $19.6 million over 384 months is about $76,800 a month. A new loan of the same size and term at 5.54% would be about $109,100 a month. The assumption saves about $32,300 a month, or roughly $387,000 a year.

But the buyer brings $10.4 million plus costs, because the old loan only covers $19.6 million. A new loan sized to the property’s income could be bigger and need less equity. So compare the total cost of the money: $19.6 million at 2.75% plus $10.4 million of equity, against a larger loan at 5.54% with a smaller equity check. Older loans also tend to carry a higher mortgage insurance premium than the 0.25% new loans pay, which narrows the gap a little.

The assumable-loan finder shows where the cheap loans are. Sizing the new loan to compare against takes the property’s net operating income, which is what the inquiry form asks for.

What slows it down

• Previous participation problems with any principal, which need to be cleared before HUD will approve.
• Deferred repairs that HUD wants funded at closing.
• Prepayment and transfer terms in the note. HUD’s file doesn’t show them; the loan documents do.
• Lender and servicer conditions, including their own fees for processing the assumption.

Build HUD’s review into the purchase contract from the start, and ask the lender and servicer for a current timeline before you agree a closing date.

Sources

• HUD Handbook 4350.1 REV-1, Chapter 13, Transfer of Physical Assets.
• Form HUD-92266, Application for Transfer of Physical Assets.
• HUD, Insured Multifamily Mortgages, active file, current as of September 30, 2026, for rates and balances.