As we head into 2025, buyers and sellers in the East Tennessee housing market are facing a familiar challenge—affordability. But there may be a powerful tool on the rise that could shift the game for both sides of the transaction: assumable loans. According to Ryan Coleman, Broker/Owner of Hometown Realty, these loans are becoming an increasingly attractive option in today’s high-interest rate environment. With the right conditions, assumable loans may provide the key to unlocking opportunity and value in Knoxville and surrounding markets.

Let’s dive into what assumable loans are, how they work, and why they could be a game-changer in 2025.

What Is an Assumable Loan?

An assumable loan allows a buyer to take over the seller’s existing mortgage—including its interest rate, terms, and remaining balance. In a market where new loan rates are often well above 6%, this option gives buyers a chance to lock in more affordable payments by “assuming” the lower rate originally secured by the seller.

Ryan Coleman explains that FHA, VA, and USDA loans are typically the most common types eligible for assumption. Conventional loans generally do not offer this option, so it’s important to understand your loan type before considering this strategy.

Why Assumable Loans Matter Right Now

Interest rates in East Tennessee remain a key factor in buyer hesitation. With national averages hovering near 6.86%, affordability has become a top concern. Ryan Coleman notes that assumable loans allow buyers to sidestep high financing costs and step into a mortgage with more favorable terms.

For sellers, this presents a golden opportunity. Highlighting an assumable loan in your listing can set your home apart in a market where standing out is everything. It’s a strategy that aligns perfectly with today’s demand for creative, value-based home financing.

The Local Impact in Knoxville and East Tennessee

The East Tennessee market continues to show signs of stabilization, with more inventory coming online in 2025. This gives buyers more choices—but it also means sellers need to go the extra mile to capture interest. Offering an assumable loan can provide that edge.

Ryan Coleman emphasizes that Knoxville-area buyers are especially interested in long-term savings and fixed-rate predictability. An assumable loan provides both, reducing the anxiety of rising interest rates and making the home more attractive overall.

What Buyers and Sellers Need to Know

For Buyers:

• You’ll take on the seller’s current mortgage terms.

• You may need to make a down payment or secure additional financing for any amount beyond the current loan balance.

• Qualification through the original lender is still required.

For Sellers:

• You must confirm whether your loan is eligible for assumption.

• Be ready to work closely with your lender and real estate agent to ensure a smooth transfer.

• Marketing your home with an assumable loan can increase buyer traffic and interest.

Challenges to Consider

While assumable loans are exciting, they do come with some hurdles. Not all buyers will qualify, and some may not be able to cover the difference between the loan and purchase price without added financing. Additionally, not every loan type is eligible, so verifying your loan details early is essential.

Bottom Line

Assumable loans are poised to make a comeback in 2025, especially in dynamic local markets like Knoxville and East Tennessee. For buyers, they offer a path to homeownership with better terms. For sellers, they represent a powerful tool to increase marketability in a competitive landscape.

Ryan Coleman, Broker/Owner of Hometown Realty, has the insight and local expertise to help you explore whether an assumable loan strategy is right for your situation. With over 20 years of real estate experience in East Tennessee, Ryan is your trusted advisor for navigating this changing market.

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