Portable Mortgages: What Are They And How Do They Work?

Homeowners who purchased properties during the height of the pandemic were thrilled with the rock-bottom mortgage rates they secured — some as low as 2.65%. A few years later, however, those rates are creating headaches for the housing market. Starting in 2022, rates shot higher, hitting 7% the following year. Although mortgage rates have been trending downward since then, they've remained in the 6% range, where they are expected to stay over the next few years. Many homeowners who locked in low rates don't want to give those up by selling their home and taking on a new mortgage at a higher rate. As a result, would-be sellers are staying put, which has created a lack of home inventory and caused prices to rise. One solution that has been posed is to introduce portable mortgages, which would let homeowners take their existing mortgages with them when they move. But some experts aren't convinced it's a good solution. 

Portable mortgages don't exist in the U.S, but the idea has been gaining steam as the government looks for ways to spur sales activity among homeowners. In a November 2025 post on X, Federal Housing Finance Agency Director Bill Pulte, who oversees mortgage giants Freddie Mac and Fannie Mae, commented that the agency is "actively evaluating portable mortgages." If they do come to fruition, they would allow homeowners to carry their existing mortgage contract to a new home, rather than prepaying their existing loan when they sell and taking out a new loan on a different property. Being able to maintain an interest rate of 3% or 4% could amount to significant savings for homeowners who would otherwise be paying north of 6%. 

Holding onto a lower rate would be good news for many existing homeowners who would like to move. However, the entire home-buying process is already complicated, and the introduction of portable mortgages would make it even more so while creating some significant challenges. For example, it could be tricky if the new home is worth more than the existing one. A portable mortgage would transfer the amount you owe on your current mortgage to a new property. If the new home is worth more, however, and the amount you owe on your existing mortgage isn't enough, you would either need to take out a new loan, likely at a higher rate, to cover the balance or pay the difference in cash.

According to Jake Krimmel, senior economist at Realtor.com, portable mortgages are unlikely to work because of how the existing U.S. mortgage market is structured. "The U.S. mortgage system is built on securitization, where loans are pooled and priced based on the specific property backing them. Mortgages must be tied to the home where they originated so investors can assess collateral risk," Krimmel tells Realtor.com. If the underlying property changes — for example, if the loan moves from a well-maintained home in a great location to a fixer-upper in a less desirable area — Krimmel says "the collateral (and therefore the risk profile of the entire pool) could change midstream. That breaks the current models of securitization. Investors and securitizers could presumably find ways to account for this risk moving forward, but higher risk means higher rates to compensate."

There are other mortgage-related obligations tied to specific properties that could also become more complicated with portable mortgages, such as taxes, escrow, or property liens. Another issue with portable mortgages has to do with the time for a mortgage to be paid back. When a home is sold, the proceeds are used to pay off the mortgage. Typically, this is far earlier than the 15- or 30-year term of the loan. The median length of owning a home is around 12 years. However, if a mortgage transfers to a new home, it could lengthen the mortgage duration considerably, making it harder to predict when the mortgage will be paid off. This makes it riskier for investors, who Krimmel says would expect to be compensated accordingly.

Krimmel believes portable mortgages could end up pushing mortgage rates higher. While portable mortgages could help boost housing inventory, Krimmel is doubtful it would bounce back all the way. Portable mortgages would also only benefit existing homeowners with low-rate mortgages. Finding a starter home may be a lost cause for new homebuyers who would still be faced with higher interest rates. So, while portable mortgages could alleviate some of the inventory problem, the challenges they pose may prove too great to make them a reality.