Subject-to with VA loan?

Question

Quick question BP community!

I have had trouble finding an answer to my question. Maybe you can help!

If a seller has a VA loan and you strike a subject-to deal with them, but the seller is looking to buy a new home using a VA loan would this situation pose an issue to the seller already having an existing VA loan?

Thank you!

Eliott Elias · Answer

They will be able to get another loan, as long as their total loan amount (sum of all VA loans taken) is under the threshold set by VA. Their DTI is offset 75% in the first year by your payments and they keep their entitlement.

Carlos Scarpero · Answer

Yes, the VA loan on the departing residence would stay on their entitlement, and it would limit their purchasing power.

Dave Skow · Answer

@Michael Poloncic- if understanding your question -if the seller  want to buy a new  home and use his va loan eligibility -  he will likely need to have his  present VA loan paid off  before this can occur

Jason Wray · Answer

Michael,

In most cases the answer is No, they will not have an issue.  There are some lenders who have strict overlays and that may hurt them if they go through a smaller lender or credit union.  But when you are a Veteran you can have (2) VA loans at the same time.  Usually the Veteran is using the "Change of Life" circumstance which means they are moving out of state, closer to work, school, or moving into a bigger home for increased family, out of a multifamily into a SFR, it also applies to retirees or disabilty if moving out of a larger home and into a smaller one due to up keep or mibility.

Most VA loans have an assumption clause as well.

Zach Wain · Answer

They need to speak with a lender who can pull their current entitlement charged for the current loan, and then they need to tell the lender what County they want to buy in and how much of a home and downpayment they plan to purchase.  Then the lender can run the math.  It depends on the details whether its a yes or no...

Michael Poloncic · Answer

Hey Ryan, thank you for your reply. Would you be able to elaborate on "entitlement" for me? Thanks!

Ryan Garrison · Answer

@Michael Poloncic

It is very possible.

First things first, they need to see how much of their entitlement they have used.

Michael Poloncic · Answer

Thank you for your input! How would I find the threshold set by the VA?

Subject-to with VA loan?

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