Updated 7 months ago on . Most recent reply
VA Loan Assumption - Adding Supplementary Financing and Minimize Cash OOP
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