Which type of mortgage can be assumed by the buyer when a home is sold, typically requiring qualification?

An assumable mortgage is designed specifically to allow a buyer to take over the existing mortgage of the seller when purchasing a home. This type of mortgage often requires the buyer to qualify based on their financial situation, ensuring they are capable of making the required payments. The key benefit of an assumable mortgage is that it can provide a smoother transaction for both the buyer and seller, particularly if the original mortgage has favorable terms that appeal to the new buyer.

Conventional mortgages are generally not assumable unless specifically stated, while balloon mortgages typically involve a large final payment and are not structured for assumption. FHA loans, although they can be assumable, have specific conditions and guidelines that may not apply universally. Therefore, while both FHA and assumable mortgages can be considered, the term "assumable mortgage" directly denotes the concept of a mortgage type that allows for assumption, making it the most correct choice in this scenario.