Who can assume Margo and John's FHA loan upon selling their home?

The correct answer is that a buyer who meets FHA creditworthiness standards and plans to occupy the home can assume Margo and John's FHA loan upon selling their home. FHA loans come with specific guidelines that include assumptions, which allow certain buyers to take over the existing loan under its original terms.

To assume an FHA loan, the new buyer must meet the creditworthiness standards set by the FHA, which typically involves demonstrating sufficient income, acceptable credit scores, and a history that suggests they can manage the loan. Additionally, the FHA requires that the buyer intends to occupy the home as their primary residence, which is a condition for assuming the loan, as FHA loans are designed to support homeownership for individuals and families who will live in the property.

This requirement ensures that the program serves its intended purpose of fostering stable homeownership rather than investment purposes or speculative buying. Other factors about the buyer, such as making a cash offer or having prior homeownership experience, may influence a real estate transaction but do not inherently qualify them for the assumption of an FHA loan. Meeting the FHA's specific criteria is essential for the assumption process.