VA loans can be assumed by non-veterans

Real Estate Agent · Boise, ID · Member since 2018 · 119 posts · 70 votes

I just learned this today, VA loans can be assumed by non-military buyers! This is exciting news to me and I'm surprised I hadn't heard it before since my husband is a veteran and we've purchased several homes VA as well as clients of mine that I have helped. I knew VA loans were assumable, but I had always heard it was only by another person who was VA eligible. I even had a lender tell me today that isn't true, but after more research and finding a lender who does a TON of VA loans and is super knowledgeable on the subject, I learned it is possible! The catch is that the veteran can't then use their VA loan again until that house is sold or refinanced (so basically you have to go conventional in the future, at least for a while). That's only if it's a non-veteran assuming it. If it's a Veteran assuming the loan then that doesn't apply.

Our market is changing and we need to find new ways to make deals work. Assumable loans haven't been talked about much in recent years because interest rates were so low there was no point in going through the process. But now if you can find a property with an assumable VA (or FHA) loan then you can also assume their interest rate. I started looking into this because my husband and I are selling our primary residence and we have a VA loan on it and I have been thinking of more ways to attract buyers to our property. We tried offering seller financing, money toward buying down someones rate, etc. But we have a 2.25% interest rate on this house that would cost a lot to try to buy down to that rate in today's market.

Just something to think about as you are looking at properties, maybe ask the seller or listing agent if it is possibly a VA loan and how you might be able to make a deal if they have a great rate already. Good luck!

[email protected]208-890-5236

7 Reply

218 views

Most Popular Reply

Chris MasonPro Member

Moderator

Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes

Quote from @Anna Strausbaugh:

That's an interesting angle, most important thing is that the seller/veteran understands (as yours does) that while that VA loan entitlement amount is tied up in the house they sold, they can't use it again. And if that entitlement is tied up with someone else that's sitting pretty at 2.25%, you must assume it'll never be refinanced or paid off, so that's it for your lifetime VA loan entitlement.

It's also a niche buyer, to be sure. They get to assume the in-place interest rate, they're also assuming the in-place loan balance. So if you're looking to sell for $500k and have an in-place $225k VA loan that's going to be assumed, they need to have $275k to put down, unless you want to carry a note (I see that light bulb that just lit up over your head, OP :P ).

Pragmatically, I don't think this is for buyers or buyer's agents to ask about, that would be throwing spaghetti at the wall, unless maybe the home is in a military base town. More realistically, if there's a veteran willing to give up re-using their VA loan entitlement amount in exchange for top dollar on the sales price, that's for the listing agent to proactively put in the listing description, and have a stock flier/email to send back when inquiring buyers/agents ask. And if the veteran/seller isn't willing to carry a note and moonlight as a mortgage loan servicer, very quickly/aggressively filter out people who do not have substantial down payments (sales price - current loan balance = minimum down payment).

In terms of timeline, don't plan for it to be a fast process, your rockstar local loan officer will not be processing the assumption, it'll be a group of call center people reading scripts from a computer screen. If you get a single or primary point of contact, call that a win and count yourself lucky.

Good luck. :)

4 Reply

See this reply in the discussion

22 Replies

Jump to latestLatest

Sort by

John WilliamsBusiness Member
Property Manager · Clarksville, TN · Member since 2018 · 443 posts · 210 votes
4y
That is a great point! Assumable VA loans will continue to become more appealing, given the current state of the interest rate environment. I've personally sought to assume VA loans and I am still interested in doing so. I'd love to connect if you'd like to explore this strategy further!
Cheers!
[email protected]931-272-3065
Rent My Home - Property Management4.8211 Reviews
Website View Page
0 Reply
Chris MasonPro Member
Moderator
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
4y
Quote from @Anna Strausbaugh:

I just learned this today, VA loans can be assumed by non-military buyers! This is exciting news to me and I'm surprised I hadn't heard it before since my husband is a veteran and we've purchased several homes VA as well as clients of mine that I have helped. I knew VA loans were assumable, but I had always heard it was only by another person who was VA eligible. I even had a lender tell me today that isn't true, but after more research and finding a lender who does a TON of VA loans and is super knowledgeable on the subject, I learned it is possible! The catch is that the veteran can't then use their VA loan again until that house is sold or refinanced (so basically you have to go conventional in the future, at least for a while). That's only if it's a non-veteran assuming it. If it's a Veteran assuming the loan then that doesn't apply.
Our market is changing and we need to find new ways to make deals work. Assumable loans haven't been talked about much in recent years because interest rates were so low there was no point in going through the process. But now if you can find a property with an assumable VA (or FHA) loan then you can also assume their interest rate. I started looking into this because my husband and I are selling our primary residence and we have a VA loan on it and I have been thinking of more ways to attract buyers to our property. We tried offering seller financing, money toward buying down someones rate, etc. But we have a 2.25% interest rate on this house that would cost a lot to try to buy down to that rate in today's market.
Just something to think about as you are looking at properties, maybe ask the seller or listing agent if it is possibly a VA loan and how you might be able to make a deal if they have a great rate already. Good luck!

That's an interesting angle, most important thing is that the seller/veteran understands (as yours does) that while that VA loan entitlement amount is tied up in the house they sold, they can't use it again. And if that entitlement is tied up with someone else that's sitting pretty at 2.25%, you must assume it'll never be refinanced or paid off, so that's it for your lifetime VA loan entitlement.
It's also a niche buyer, to be sure. They get to assume the in-place interest rate, they're also assuming the in-place loan balance. So if you're looking to sell for $500k and have an in-place $225k VA loan that's going to be assumed, they need to have $275k to put down, unless you want to carry a note (I see that light bulb that just lit up over your head, OP :P ).
Pragmatically, I don't think this is for buyers or buyer's agents to ask about, that would be throwing spaghetti at the wall, unless maybe the home is in a military base town. More realistically, if there's a veteran willing to give up re-using their VA loan entitlement amount in exchange for top dollar on the sales price, that's for the listing agent to proactively put in the listing description, and have a stock flier/email to send back when inquiring buyers/agents ask. And if the veteran/seller isn't willing to carry a note and moonlight as a mortgage loan servicer, very quickly/aggressively filter out people who do not have substantial down payments (sales price - current loan balance = minimum down payment).
In terms of timeline, don't plan for it to be a fast process, your rockstar local loan officer will not be processing the assumption, it'll be a group of call center people reading scripts from a computer screen. If you get a single or primary point of contact, call that a win and count yourself lucky.
Good luck. :)
4 Reply
Anna StrausbaughBusiness Member
OP
Real Estate Agent · Boise, ID · Member since 2018 · 119 posts · 70 votes
4y
Quote from @Chris Mason:

Quote from @Anna Strausbaugh:

I just learned this today, VA loans can be assumed by non-military buyers! This is exciting news to me and I'm surprised I hadn't heard it before since my husband is a veteran and we've purchased several homes VA as well as clients of mine that I have helped. I knew VA loans were assumable, but I had always heard it was only by another person who was VA eligible. I even had a lender tell me today that isn't true, but after more research and finding a lender who does a TON of VA loans and is super knowledgeable on the subject, I learned it is possible! The catch is that the veteran can't then use their VA loan again until that house is sold or refinanced (so basically you have to go conventional in the future, at least for a while). That's only if it's a non-veteran assuming it. If it's a Veteran assuming the loan then that doesn't apply.
Our market is changing and we need to find new ways to make deals work. Assumable loans haven't been talked about much in recent years because interest rates were so low there was no point in going through the process. But now if you can find a property with an assumable VA (or FHA) loan then you can also assume their interest rate. I started looking into this because my husband and I are selling our primary residence and we have a VA loan on it and I have been thinking of more ways to attract buyers to our property. We tried offering seller financing, money toward buying down someones rate, etc. But we have a 2.25% interest rate on this house that would cost a lot to try to buy down to that rate in today's market.
Just something to think about as you are looking at properties, maybe ask the seller or listing agent if it is possibly a VA loan and how you might be able to make a deal if they have a great rate already. Good luck!

That's an interesting angle, most important thing is that the seller/veteran understands (as yours does) that while that VA loan entitlement amount is tied up in the house they sold, they can't use it again. And if that entitlement is tied up with someone else that's sitting pretty at 2.25%, you must assume it'll never be refinanced or paid off, so that's it for your lifetime VA loan entitlement.
It's also a niche buyer, to be sure. They get to assume the in-place interest rate, they're also assuming the in-place loan balance. So if you're looking to sell for $500k and have an in-place $225k VA loan that's going to be assumed, they need to have $275k to put down, unless you want to carry a note (I see that light bulb that just lit up over your head, OP :P ).
Pragmatically, I don't think this is for buyers or buyer's agents to ask about, that would be throwing spaghetti at the wall, unless maybe the home is in a military base town. More realistically, if there's a veteran willing to give up re-using their VA loan entitlement amount in exchange for top dollar on the sales price, that's for the listing agent to proactively put in the listing description, and have a stock flier/email to send back when inquiring buyers/agents ask. And if the veteran/seller isn't willing to carry a note and moonlight as a mortgage loan servicer, very quickly/aggressively filter out people who do not have substantial down payments (sales price - current loan balance = minimum down payment).
In terms of timeline, don't plan for it to be a fast process, your rockstar local loan officer will not be processing the assumption, it'll be a group of call center people reading scripts from a computer screen. If you get a single or primary point of contact, call that a win and count yourself lucky.
Good luck. :)

I totally get it and in this case it works for us because we already have the loan closed on our next house we are moving into and it's not a VA loan. I just put it out there as a potential angle for people to look into. Also, I do think it is possible to do a 2nd mortgage for the balance like you were talking about instead of seller financing, but we are in a unique situation where we could do seller financing and be ok with that. I know that is rare and we would need to find a very specific buyer to make it work.
[email protected]208-890-5236
1 Reply
Anna StrausbaughBusiness Member
OP
Real Estate Agent · Boise, ID · Member since 2018 · 119 posts · 70 votes
4y
Quote from @John Williams:

That is a great point! Assumable VA loans will continue to become more appealing, given the current state of the interest rate environment. I've personally sought to assume VA loans and I am still interested in doing so. I'd love to connect if you'd like to explore this strategy further!
Cheers!

I'd definitely be interested in chatting with someone who has actually done it. Let's connect!
[email protected]208-890-5236
0 Reply
JD MartinBusiness Member
Moderator
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
4y
Quote from @Chris Mason:

Quote from @Anna Strausbaugh:

I just learned this today, VA loans can be assumed by non-military buyers! This is exciting news to me and I'm surprised I hadn't heard it before since my husband is a veteran and we've purchased several homes VA as well as clients of mine that I have helped. I knew VA loans were assumable, but I had always heard it was only by another person who was VA eligible. I even had a lender tell me today that isn't true, but after more research and finding a lender who does a TON of VA loans and is super knowledgeable on the subject, I learned it is possible! The catch is that the veteran can't then use their VA loan again until that house is sold or refinanced (so basically you have to go conventional in the future, at least for a while). That's only if it's a non-veteran assuming it. If it's a Veteran assuming the loan then that doesn't apply.
Our market is changing and we need to find new ways to make deals work. Assumable loans haven't been talked about much in recent years because interest rates were so low there was no point in going through the process. But now if you can find a property with an assumable VA (or FHA) loan then you can also assume their interest rate. I started looking into this because my husband and I are selling our primary residence and we have a VA loan on it and I have been thinking of more ways to attract buyers to our property. We tried offering seller financing, money toward buying down someones rate, etc. But we have a 2.25% interest rate on this house that would cost a lot to try to buy down to that rate in today's market.
Just something to think about as you are looking at properties, maybe ask the seller or listing agent if it is possibly a VA loan and how you might be able to make a deal if they have a great rate already. Good luck!

That's an interesting angle, most important thing is that the seller/veteran understands (as yours does) that while that VA loan entitlement amount is tied up in the house they sold, they can't use it again. And if that entitlement is tied up with someone else that's sitting pretty at 2.25%, you must assume it'll never be refinanced or paid off, so that's it for your lifetime VA loan entitlement.
It's also a niche buyer, to be sure. They get to assume the in-place interest rate, they're also assuming the in-place loan balance. So if you're looking to sell for $500k and have an in-place $225k VA loan that's going to be assumed, they need to have $275k to put down, unless you want to carry a note (I see that light bulb that just lit up over your head, OP :P ).
Pragmatically, I don't think this is for buyers or buyer's agents to ask about, that would be throwing spaghetti at the wall, unless maybe the home is in a military base town. More realistically, if there's a veteran willing to give up re-using their VA loan entitlement amount in exchange for top dollar on the sales price, that's for the listing agent to proactively put in the listing description, and have a stock flier/email to send back when inquiring buyers/agents ask. And if the veteran/seller isn't willing to carry a note and moonlight as a mortgage loan servicer, very quickly/aggressively filter out people who do not have substantial down payments (sales price - current loan balance = minimum down payment).
In terms of timeline, don't plan for it to be a fast process, your rockstar local loan officer will not be processing the assumption, it'll be a group of call center people reading scripts from a computer screen. If you get a single or primary point of contact, call that a win and count yourself lucky.
Good luck. :)

I think you can technically have more than one VA loan at a time, it's just that the value of the loan to you will be reduced by whatever was used on the previous loan such that you won't be able to get another one unless you have enough money to make up the difference on the down payment. Since the VA guarantee is really only worth maximum about 140 grand or so I think currently, each house would have to have been $300k or less in order for that to work. So if your first house was 500k and you used your VA entitlement you wouldn't really have anything left to apply to another house. Definitely this strategy is really hen's teeth for sure!

In any case, I don't think I'd want to let anyone else get my VA benefit. I'd just sell (or refinance out) of the original one to keep my entitlement intact.
Podcast Guest on Show #243
Skyline Properties
View Page
0 Reply
Chris MasonPro Member
Moderator
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
4y
Quote from @JD Martin:

Quote from @Chris Mason:

Quote from @Anna Strausbaugh:

I just learned this today, VA loans can be assumed by non-military buyers! This is exciting news to me and I'm surprised I hadn't heard it before since my husband is a veteran and we've purchased several homes VA as well as clients of mine that I have helped. I knew VA loans were assumable, but I had always heard it was only by another person who was VA eligible. I even had a lender tell me today that isn't true, but after more research and finding a lender who does a TON of VA loans and is super knowledgeable on the subject, I learned it is possible! The catch is that the veteran can't then use their VA loan again until that house is sold or refinanced (so basically you have to go conventional in the future, at least for a while). That's only if it's a non-veteran assuming it. If it's a Veteran assuming the loan then that doesn't apply.
Our market is changing and we need to find new ways to make deals work. Assumable loans haven't been talked about much in recent years because interest rates were so low there was no point in going through the process. But now if you can find a property with an assumable VA (or FHA) loan then you can also assume their interest rate. I started looking into this because my husband and I are selling our primary residence and we have a VA loan on it and I have been thinking of more ways to attract buyers to our property. We tried offering seller financing, money toward buying down someones rate, etc. But we have a 2.25% interest rate on this house that would cost a lot to try to buy down to that rate in today's market.
Just something to think about as you are looking at properties, maybe ask the seller or listing agent if it is possibly a VA loan and how you might be able to make a deal if they have a great rate already. Good luck!

That's an interesting angle, most important thing is that the seller/veteran understands (as yours does) that while that VA loan entitlement amount is tied up in the house they sold, they can't use it again. And if that entitlement is tied up with someone else that's sitting pretty at 2.25%, you must assume it'll never be refinanced or paid off, so that's it for your lifetime VA loan entitlement.
It's also a niche buyer, to be sure. They get to assume the in-place interest rate, they're also assuming the in-place loan balance. So if you're looking to sell for $500k and have an in-place $225k VA loan that's going to be assumed, they need to have $275k to put down, unless you want to carry a note (I see that light bulb that just lit up over your head, OP :P ).
Pragmatically, I don't think this is for buyers or buyer's agents to ask about, that would be throwing spaghetti at the wall, unless maybe the home is in a military base town. More realistically, if there's a veteran willing to give up re-using their VA loan entitlement amount in exchange for top dollar on the sales price, that's for the listing agent to proactively put in the listing description, and have a stock flier/email to send back when inquiring buyers/agents ask. And if the veteran/seller isn't willing to carry a note and moonlight as a mortgage loan servicer, very quickly/aggressively filter out people who do not have substantial down payments (sales price - current loan balance = minimum down payment).
In terms of timeline, don't plan for it to be a fast process, your rockstar local loan officer will not be processing the assumption, it'll be a group of call center people reading scripts from a computer screen. If you get a single or primary point of contact, call that a win and count yourself lucky.
Good luck. :)

I think you can technically have more than one VA loan at a time, it's just that the value of the loan to you will be reduced by whatever was used on the previous loan such that you won't be able to get another one unless you have enough money to make up the difference on the down payment. Since the VA guarantee is really only worth maximum about 140 grand or so I think currently, each house would have to have been $300k or less in order for that to work. So if your first house was 500k and you used your VA entitlement you wouldn't really have anything left to apply to another house. Definitely this strategy is really hen's teeth for sure!

In any case, I don't think I'd want to let anyone else get my VA benefit. I'd just sell (or refinance out) of the original one to keep my entitlement intact.

The ~$140k number you are referencing is the "VA Guarantee" to the lender of 25%, you 4x it for max loan amount with 0% down. It also scales up in HCOL counties. (By using ~$140k, you're indirectly referencing 25% of the 2021 conforming conventional loan limit, so I'm guessing you read $137,062 on a VA COE issued during calendar year 2021 that you came across for some reason and "about $140k" is what your brain stored)

But for folks with no outstanding entitlement, that limit was tossed out the window right before COVID, one of my main wholesale lenders is doing $4,000,000 VA loans on up to fourplexes with 0% down as of yesterday (how smooth was that California military veterans relevant plug, and that keyword/SEO drop right there? :P ), but that ain't gonna happen if you've got some $220k/4 of entitlement already used up somewhere else, even if it's by a non-veteran who assumed your loan.
1 Reply
JD MartinBusiness Member
Moderator
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
4y
Quote from @Chris Mason:

Quote from @JD Martin:

Quote from @Chris Mason:

Quote from @Anna Strausbaugh:

I just learned this today, VA loans can be assumed by non-military buyers! This is exciting news to me and I'm surprised I hadn't heard it before since my husband is a veteran and we've purchased several homes VA as well as clients of mine that I have helped. I knew VA loans were assumable, but I had always heard it was only by another person who was VA eligible. I even had a lender tell me today that isn't true, but after more research and finding a lender who does a TON of VA loans and is super knowledgeable on the subject, I learned it is possible! The catch is that the veteran can't then use their VA loan again until that house is sold or refinanced (so basically you have to go conventional in the future, at least for a while). That's only if it's a non-veteran assuming it. If it's a Veteran assuming the loan then that doesn't apply.
Our market is changing and we need to find new ways to make deals work. Assumable loans haven't been talked about much in recent years because interest rates were so low there was no point in going through the process. But now if you can find a property with an assumable VA (or FHA) loan then you can also assume their interest rate. I started looking into this because my husband and I are selling our primary residence and we have a VA loan on it and I have been thinking of more ways to attract buyers to our property. We tried offering seller financing, money toward buying down someones rate, etc. But we have a 2.25% interest rate on this house that would cost a lot to try to buy down to that rate in today's market.
Just something to think about as you are looking at properties, maybe ask the seller or listing agent if it is possibly a VA loan and how you might be able to make a deal if they have a great rate already. Good luck!

That's an interesting angle, most important thing is that the seller/veteran understands (as yours does) that while that VA loan entitlement amount is tied up in the house they sold, they can't use it again. And if that entitlement is tied up with someone else that's sitting pretty at 2.25%, you must assume it'll never be refinanced or paid off, so that's it for your lifetime VA loan entitlement.
It's also a niche buyer, to be sure. They get to assume the in-place interest rate, they're also assuming the in-place loan balance. So if you're looking to sell for $500k and have an in-place $225k VA loan that's going to be assumed, they need to have $275k to put down, unless you want to carry a note (I see that light bulb that just lit up over your head, OP :P ).
Pragmatically, I don't think this is for buyers or buyer's agents to ask about, that would be throwing spaghetti at the wall, unless maybe the home is in a military base town. More realistically, if there's a veteran willing to give up re-using their VA loan entitlement amount in exchange for top dollar on the sales price, that's for the listing agent to proactively put in the listing description, and have a stock flier/email to send back when inquiring buyers/agents ask. And if the veteran/seller isn't willing to carry a note and moonlight as a mortgage loan servicer, very quickly/aggressively filter out people who do not have substantial down payments (sales price - current loan balance = minimum down payment).
In terms of timeline, don't plan for it to be a fast process, your rockstar local loan officer will not be processing the assumption, it'll be a group of call center people reading scripts from a computer screen. If you get a single or primary point of contact, call that a win and count yourself lucky.
Good luck. :)

I think you can technically have more than one VA loan at a time, it's just that the value of the loan to you will be reduced by whatever was used on the previous loan such that you won't be able to get another one unless you have enough money to make up the difference on the down payment. Since the VA guarantee is really only worth maximum about 140 grand or so I think currently, each house would have to have been $300k or less in order for that to work. So if your first house was 500k and you used your VA entitlement you wouldn't really have anything left to apply to another house. Definitely this strategy is really hen's teeth for sure!

In any case, I don't think I'd want to let anyone else get my VA benefit. I'd just sell (or refinance out) of the original one to keep my entitlement intact.

The ~$140k number you are referencing is the "VA Guarantee" to the lender of 25%, you 4x it for max loan amount with 0% down. It also scales up in HCOL counties. (By using ~$140k, you're indirectly referencing 25% of the 2021 conforming conventional loan limit, so I'm guessing you read $137,062 on a VA COE issued during calendar year 2021 that you came across for some reason and "about $140k" is what your brain stored)

But for folks with no outstanding entitlement, that limit was tossed out the window right before COVID, one of my main wholesale lenders is doing $4,000,000 VA loans on up to fourplexes with 0% down as of yesterday (how smooth was that California military veterans relevant plug, and that keyword/SEO drop right there? :P ), but that ain't gonna happen if you've got some $220k/4 of entitlement already used up somewhere else, even if it's by a non-veteran who assumed your loan.

Yeah, I think 140 stuck because I actually got my VA COE last year when I was considering moving and wanted to free up some dp cash for investments. I've been out of the military for 30 years and I never used my VA loan benefits.
Podcast Guest on Show #243
Skyline Properties
View Page
0 Reply
Kristopher Kelly
Investor · Fort Walton Beach. FL · Member since 2020 · 87 posts · 42 votes
4y
@Anna Strausbaugh
This is so cool! Thank you for this thought and I would've never known if you didn't post this. This is a game-changer for me.
1 Reply
Anna StrausbaughBusiness Member
OP
Real Estate Agent · Boise, ID · Member since 2018 · 119 posts · 70 votes
4y
Quote from @Kristopher Kelly:

@Anna Strausbaugh
This is so cool! Thank you for this thought and I would've never known if you didn't post this. This is a game-changer for me.

You're welcome! If it helps even one person, I'm glad!
[email protected]208-890-5236
0 Reply
Travis Hill
Investor · Multiple · Member since 2019 · 175 posts · 150 votes
4y
a lot of solid responses and collaboration. As I read your comments @Anna Strausbaugh it is very similiar to a 'subject to' deal except that you are assuming the loan instead of using a wrap around or keeping the mortgage in the onwers names. Dan Derosa has a lot of experience with subject to deals. Check out the similarities!
1 Reply
Zach Wain
Scottsdale, AZ · Member since 2019 · 435 posts · 248 votes
4y
In my experience, it is extremely difficult to assume a loan. The loan servicer must approve it, and most of them do not want to deal with the hassle.
0 Reply
Lynette Thueson
Member since 2020 · 4 posts · 2 votes
4y
I am a realtor in Boise and closing a VA loan assumption tomorrow! It will be just over 90 days from signed purchase and sales agreement to closing date. Penny Mac, who services VA loans, was very slow and hard to get a hold of. Thankfully, the buyer (not VA eligible) and seller were willing to see it through since the rate was 2.25%. Yes, she left some VA eligibility on the home, but had enough eligibility left over to purchase her next home. Definitely call a knowledgeable VA lender. I called 3 lenders who didn't know how the assumption process worked until I got a rockstar lender who educated me and sent me information. If you are in the Boise area, call Dean Tucker with Benchmark Mortgage. I have never used him before, but if I ever have a VA buyer he will be my go to lender.

Lynette Thueson, Realtor

Silvercreek Realty Group

2 Reply
Anna StrausbaughBusiness Member
OP
Real Estate Agent · Boise, ID · Member since 2018 · 119 posts · 70 votes
4y
Quote from @Lynette Thueson:

I am a realtor in Boise and closing a VA loan assumption tomorrow! It will be just over 90 days from signed purchase and sales agreement to closing date. Penny Mac, who services VA loans, was very slow and hard to get a hold of. Thankfully, the buyer (not VA eligible) and seller were willing to see it through since the rate was 2.25%. Yes, she left some VA eligibility on the home, but had enough eligibility left over to purchase her next home. Definitely call a knowledgeable VA lender. I called 3 lenders who didn't know how the assumption process worked until I got a rockstar lender who educated me and sent me information. If you are in the Boise area, call Dean Tucker with Benchmark Mortgage. I have never used him before, but if I ever have a VA buyer he will be my go to lender.

Lynette Thueson, Realtor

Silvercreek Realty Group

That's awesome, @Lynette Thueson! Congrats on seeing it through! Yes, Dean Tucker is my guy, he is THE MOST knowledgeable VA lender I've ever come across. It is a long process with these institution size lenders, especially finding someone there who understands the process. Glad it worked out for your client!

[email protected]208-890-5236
0 Reply
Jason B.Pro Member
Rental Property Investor · Boise, ID · Member since 2017 · 228 posts · 180 votes
3y
Many people focus on the "entitlement amount" but the more important number to pay attention to is the ‘county loan limit'. The VA ‘loan limits' are based on county in which the home purchased is located and the unit size (SFH, duplex, triplex or quadplex). Right now, the baseline ‘limit' is $647,200 for a single family home, but can go up in more expensive counties (the same applies for the small multi's). You can definitely have more than 1 VA loan at a given time, it just reduces your entitlement. So, if you have a VA loan already for $300k, then you would deduct that from whatever county you are buying in again to come up with your remaining ‘loan limit'. In the case of not enough entitlement remaining, for example, if you have a $300k VA loan and the loan limit for a SFH in county ‘x' you want to buy is $647,200, then you will have $347,200 to use towards the next purchase. If the new purchase costs more than the $347,200 you have left, you can use your remaining entitlement and you pay 25% of the difference as a down payment, i.e. existing VA loan =$300k, $347,200 in remaining entitlement and purchase price of $500k would result in $500k purchase minus $347,200 in remaining entitlement =$152,800 difference. $152,800 difference x 25%= $38,200 you would have to pay at closing and you'd still have no PMI. An assumed VA loan would plug in place of the new property purchased in this example.

Also, you have a one-time option to have your VA loan eligibility restored regardless of how much you have used; normally you have to dispose of the property, meaning sell or pay-off to have it fully restored. I did this last year myself. I had bought my primary residence in 2019 in Meridian, Idaho with my VA loan. Thanks to our rise in equity, last year I refi'd our house out (just rate and term-no cash out) into a conventional 30-year with the same 2.75% interest rate, so that my VA entitlement could be fully restored as we don't plan to live here forever, and could then use it on our future primary residence, while keeping this one as a rental. All I had to do was fill out a form on the VA website and submit it, and after a SHOCKINGLY short time span I received the COE (certificate of eligibility) showing my fully restored entitlement.
1 Reply
Cliff BennerBusiness Member
Accountant · Denver, CO · Member since 2020 · 394 posts · 183 votes
2y
Can a VA loan be assumed by investors as a non-owner occupied property, Veteran or not?
Benner Stride52 Reviews
Website View Page
0 Reply
Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
2y
Quote from @Cliff Benner:

Can a VA loan be assumed by investors as a non-owner occupied property, Veteran or not?

No
[email protected]301-893-4635 Podcast Guest on Show #192
District Invest Group545 Reviews
Website View Page
3 Reply
Daniel Logan
Real Estate Agent · Rapid City SD, United States · Member since 2023 · 10 posts · 3 votes
2y
Very good to know! Thanks for sharing!
0 Reply
Joel Derby
Investor · Corpus Christi, TX · Member since 2019 · 2 posts · 1 vote
2y
Quote from @Russell Brazil:

Quote from @Cliff Benner:

Can a VA loan be assumed by investors as a non-owner occupied property, Veteran or not?

No
This answer has been so hard to find. Thank you!
0 Reply
Ali Hussain
Member since 2021 · 1 post · 0 votes
2y
Does anyone know if a non-veteran buyer can assume a VA loan with the intention to rent the proposed? Or it is only possible for primary residence purposes? And this scenario is for property in California if that makes any difference.

Thanks and i appreciate the all the helpful information from this forum. Cheers
0 Reply
Anna StrausbaughBusiness Member
OP
Real Estate Agent · Boise, ID · Member since 2018 · 119 posts · 70 votes
2y
@Ali Hussain Hi! I recently came across this scenario and the answer is no. Even if you are a VA eligible buyer you cannot assume a VA loan with the intent of renting it out as an investment property. We went to the VA for this answer so this is not just the opinion of a lender or agent.
[email protected]208-890-5236
0 Reply
Carlos Scarpero
Lender · Dayton, OH · Member since 2018 · 118 posts · 19 votes
2y
While they can be assumed by non vets, it's not a good idea. The entitlement would stay with the vet and not transfer over. When the vet buys another house it would limit how much they could get before having to kick in a down payment.
0 Reply
Ryan ThomsonBusiness Member
Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes
6mo
Great info in the original post. One thing worth adding: the veteran doesn't necessarily lose their entitlement permanently. There's a process called substitution of entitlement, where a qualified veteran assumes the loan and their entitlement substitutes for the seller's. Seller gets full entitlement back at closing, buyer uses their VA eligibility. It's clean. A lot of veteran sellers don't know this option exists and that changes whether they're willing to entertain an assumption at all.
On the "spaghetti at the wall" comment for buyers asking about assumables: I'd push back a bit. You don't have to ask randomly. You can specifically search for it. Roam.com aggregates assumable inventory nationwide. You can filter MLS by loan type (FHA/VA) in most markets. My team finds 2-3 assumable properties per week just running smart searches. It's not random anymore.
The equity gap issue is real but workable. If there's a large gap between the loan balance and the purchase price, the buyer can cover it with a second mortgage, seller carry, or gift funds. I've had buyers close at 2.99% with $16K out of pocket on a $430K purchase because the loan balance was close to price. The deals where you need $200K+ to cover the gap are the harder ones, but there's still a blended rate play there.
$500K home, $300K loan at 2.5%, need a $175K second at 9%, $25K down: total payment comes to roughly $2,200/month vs $3,000+ on a new conventional. Still $800/month better. Still worth exploring.
For the primary residence requirement on VA assumptions: yes, that applies. Owner-occupied only. Investment deals need a different structure.
-
The Assumable Guy544 Reviews
Website View Page
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.