Homebuyers are flocking to a type of loan that offers a lower mortgage rate. But they often require bigger down payments, and lenders don't like to give them.

• Homebuyers seeking lower mortgage rates are snapping up a rare type of loan.
• Assumable mortgages allow buyers to take over a seller's original mortgage.
• But only government-backed loans are eligible, and they require higher, all-cash down payments.

A type of mortgage that can offer ultralow rates is becoming more popular among homebuyers — but they're rare and difficult to come across, real-estate experts say.

Buyers have been increasingly turning to assumable mortgages , or home-lending schemes where a buyer takes over a seller's mortgage at the rate it was originally financed.

That's likely to lead to a good deal for buyers sifting through homes on the market today. Borrowing costs on the 30-year fixed mortgage , the most popular type of mortgage in the US, ticked higher to 6.7% last week, according to Freddie Mac data. Meanwhile, 85% of existing homeowners have a mortgage rate under 6% , an analysis from Realtor.com found.

Assumable mortgages make up just a small portion of the housing market, though their share of the overall market is quickly rising. In 2023, 3,825 mortgages financed through the Federal Housing Administration were assumed by a new buyer, up 72% from the prior year. Also in 2023, 2,244 mortgages financed through Veterans Affairs Housing Assistance were assumed, up 628% from the previous year.

The number of assumable mortgages looks on track to more than double in 2024. Through May, 3,477 FHA mortgages were assumed, while 1,457 VA mortgages were assumed through March, according to government data cited by The Washington Post .

"An assumable mortgage may be especially appealing to buyers as these loans effectively pass a homeowner's current low-rate mortgage to the buyer," Hannah Jones, a senior analyst at Realtor.com, said in a statement.

The loans, though, come with a few caveats.

For one, only government-sponsored mortgages are eligible to be assumed, such as a mortgage within the FHA or VA program. Roughly one-quarter of mortgages in the US are assumable, Realtor.com estimated.

Secondly, buyers assuming a mortgage will typically need to put down a higher down payment, which is usually the difference between the sales price of the home and the remaining balance on the preexisting mortgage. Usually, that payment will be made in cash, unless the buyer can secure another loan financed under today's mortgage rates, Jones said.

Thirdly, since assumable mortgages don't offer much upside for lenders, they're often reluctant to offer them in the first place, Realtor.com says. It adds that many lenders don't understand how they work, so they stay away.

Real-estate experts expect rates on conventional mortgages to stay elevated for the near future. Rates on the 30-year fixed mortgage are expected to end the year above 6.5%, Realtor.com previously forecast , influenced by elevated interest rates in the economy.