VA Loan Assumption - Adding Supplementary Financing and Minimize Cash OOP

Raleigh, North Carolina
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VA Loan Assumption - Adding Supplementary Financing and Minimize Cash OOP

Jack McCormack
Member since 2025 · 2 posts · 0 votes

Hello!

Question: What is the best method to finance a $60k-$100k gap after VA loan assumption? Goal is to minimize cash OOP.

Personal Background: I am a former oil/gas engineer, currently doing military work. I bought two (2) single-family homes in 2019 and sold them in 2023. I am a limited-partner in five (5) multifamily syndications. 

Deal-Specific Information: 
- VA loan assumption at 2.5% for $260,000
- Purchase Price $360,000. The property has been on the market for 4+ months and it sounds like the seller is more negotiable now.
- I have enough money in retirement accounts to fund the difference ($60k-$100k pending negotiations), but I would prefer to finance the difference to minimize cash OOP and avoid penalties for early withdrawal.
- Lender offered 30-year fixed financing at 8.5%, 90% LTV to cover the gap.
- At $100k spread between purchase and assumption, this means I would still be OOP $36k with $360k appraisal. If a lower purchase price were calculated, the LTV would be based off of the purchase price, not the appraisal. e.g. if the purchase price were negotiated down to $330k, I would be $33k OOP with a $37k supplementary loan.


Anything you could recommend would be most appreciated!

Jack

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  • Richard Mark
    Lender · San Francisco Bay Area · Member since 2025 · 11 posts · 11 votes
    1y

    Hi Jack, the 30 yr fixed rate at 8.5% seems high to me. A common option I see for people to bridge this gap is to collateralize another property and get a cash out loan, although rates depend on what your are purchasing the new property for (primary resi vs investment property). I would also look into getting a HELOC/refi if you have other real estate you wholly own.

    Another thing to consider is the possibility of a portfolio loan on all your assets, but that might come with some extra complication depending how your interest in the syndications is structured.

    1Reply
  • Jack McCormack
    OP
    Member since 2025 · 2 posts · 0 votes
    1y

    Much appreciated Richard!

    0Reply
  • Ty CouttsBusiness Member
    Lender · Denver, CO · Member since 2022 · 467 posts · 230 votes
    1y

    Hey Jack — first off, thank you for your service, and kudos on already stacking experience in both direct ownership and LP positions. You're navigating a unique hybrid opportunity with this VA assumption + gap financing model, so let's walk through the best options to minimize your out-of-pocket (OOP) while protecting long-term upside.

    Strategy: Blend of Negotiation, Creative Financing & Leverage

    1. Negotiate Seller Concessions or Carryback Financing

    • If the seller is motivated (property has been sitting 4+ months), explore seller carryback for some or all of the gap.

    • Example: Seller carries a $40K second at low interest (or even interest-only), allowing you to minimize the size of any outside second loan

    • Seller carrybacks don't count toward your DTI and can be creatively structured.

    2. Use a HELOC on Existing Equity

    • If you have equity in a primary residence or investment property, a HELOC could fund the gap:

      • You keep the VA 2.5% rate untouched

      • HELOCs are interest-only and flexible

      • You preserve liquidity in retirement accounts

    This is often cheaper and easier than the 8.5% fixed second your lender offered.

    3. DSCR Second Loan or Unsecured LOC

    • Depending on your income and assets, you might qualify for a DSCR second or personal unsecured LOC from a credit union or fintech lender:

      • These can fund the gap without being tied to the purchase property

      • May offer better terms than 8.5% and no origination points

      • Fast funding and less red tape

    Example Hybrid Stack

    Let’s say you negotiate purchase down to $340K:

    • $260K via VA Assumption @ 2.5%

    • $40K seller carry at 5%, interest-only

    • $40K from a HELOC on another property

    • Total cash OOP: ~$0–10K (closing + reserves)

    You’re in a powerful position as a buyer right now — VA assumptions are rare, and your seller may already be feeling the clock ticking. Leveraging low-interest tools (seller carry, HELOC, or DSCR seconds) to bridge the gap creatively is 100% the right mindset.

    Want help modeling this scenario or connecting with lenders who do investor-friendly seconds or gap funding? I’m happy to assist!

    [email protected]719-641-5169
    Ty Coutts - Aslan Home Lending 544 Reviews
    WebsiteView Page
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