The risks associated with assumability are that the buyer must meet strict borrower requirements in order to be eligible for the loan assumption. This means that the lender must ensure the new borrower has the financial means to continue repaying the loan and that they aren't a financial risk. Additionally, in many cases where loan assumption is allowed, like with HUD multifamily loans, a buyer must pay a fee — typically between 0.05% and 1% of the original loan amount to assume the loan. CMBS financing sometimes allows loan assumption as a means of avoiding strict prepayment penalties associated with conduit loans, generally along with a standard 1% assumption fee as well.