Who is eligible to assume a va loan

When you buy a home with a VA mortgage, there are associated fees and expenses including VA appraisal fees, and the VA loan funding fee. Some veterans who take advantage of their VA loan benefit don't think about using it again, but there are several circumstances where a borrower can get their VA home loan eligibility restored.

NMLS Not available in NY. Legal VALoans. VA loans. Advertiser disclosure You're our priority. Home Articles Reusing Your Benefits. By Michael Stradford Updated October 8, Generally, there are two processes for loan assumptions: Loans serviced by lenders who have automatic authority may process assumptions without sending every loan to the appropriate VA Regional Loan Center Loans serviced by lenders who don't have automatic authority must send all assumption requests to the appropriate VA Regional Loan Center, which can take several weeks to process When loans are assumed, it's the servicer's responsibility to ensure the borrower who is assuming the property meets VA and lender credit standards.

Compare top VA Lenders now. Updated October 8, If the loan assumer is not a veteran, then the seller will lose his VA loan benefit because it stays with the property and mortgage until it is paid off. The buyer will need to meet lender specific requirements. Some of these parameters include:. Are you new to Homeownership and Military Life? Read about the challenges and perks. Someone who seeks a lower interest rate: If the home was bought at a lower interest rate years ago, a buyer might want to take advantage of that locked rate.

Remember, the buyer takes over the exact terms of the existing loan, including the years remaining, interest rate, and monthly payment.

Someone in a divorce situation may want to assume a loan: For instance, the wife may take over the loan and keep the remaining equity in the property.

Or, depending on your veteran status, you may be exempt from the funding fee altogether. Here are possible reasons veterans and surviving spouses are excluded from the funding fee:. Read on to protect your future borrowing options. Release of liability: This is important to understand—according to Veterans United Home Loans , homeowners have to ask for and obtain a release of liability from the lender or servicer.

Without a release of liability, VA homeowners could take a significant credit hit or lose a portion of their entitlement if the person assuming their loan later makes late payments or defaults on the mortgage. As the homeowner, what does this mean to you? If you have an assumable loan—VA or FHA— you can offer an attractive financing package as a selling point while marketing your home to prospective buyers.

But first, as the home seller, the VA requires you to meet basic criteria. Your loan must be up to date without late payments, or the difference can be made up through the sale of the property. This material may not be published, broadcast, rewritten or redistributed. You May Also Like. My Profile News Home Page. Get the Military Insider Newsletter Give me more benefit content and other military content to my inbox.

By signing up, you agree to our Privacy Notice. Thank you for subscribing! One last step. Featured VA Loan Articles. While VA loan assumption can help a spouse take over the liability of the loan from the veteran, it might not be the best option. During VA loan assumption, the original buyer must ask and obtain the release of liability before the loan closing.

Release of liability is a legal document stating that the original buyer no longer stands responsible for the loan payments and other liabilities associated with it. The new borrower must be solely liable for all the terms and conditions of the mortgage, including repaying the VA in case a claim is filed. The original owner must fill and submit the VA form to request the release of liability from the VA mortgage.

Your credit score could take a significant hit if the new buyer defaults on the loan repayment without release. In addition to requesting the release of liability, you must also formally substitute their entitlement for yours.

After obtaining your release of liability and substituting the entitlement, you can borrow another VA loan with partial entitlement. You can also opt for one-time restoration of entitlement , which could help you get a mortgage without any VA loan limits. If the new buyer can meet all the minimum credit and income requirements, they are eligible for the loan— even non-veterans or civilians.

However, if the buyer is a civilian, the seller will lose their VA loan benefits as their entitlement will still be tied to the assumed mortgage. If you can meet any ONE of the following conditions, your funding fee for VA loan assumption may be waived. You can borrow another VA loan even if you have had another loan assumed from you, given your VA loan entitlement is not tied with the previous loan. However, you must also remember that substituting the entitlement is only possible if the new owner is an eligible Veteran or a service member.

Although the world is increasingly shifting towards digital media, print media is still alive and well. You can search through your local newspaper to find assumable mortgages, which the sellers could have listed. There are several websites, like TakeList , where you can find listings for assumable VA mortgages.