Looking for Advice on Structuring a Deal – Need Guidance - Va Loan Assumption
Investor · Irvine, CA · Member since 2009 · 259 posts · 183 votes
Looking for Advice on Structuring a Deal – Need Guidance - Va Loan Assumption
Most Popular Reply
Property Manager · Nashville, TN · Member since 2025 · 66 posts · 35 votes
1yHow to Structure a Deal with a VA Loan Assumption & Mortgage Arrears
Hi Dani,
This is an interesting deal, and you’re right to be cautious. Here’s how you can navigate it:
1. Can a VA Loan Be Assumed If the Seller is Behind on Payments?
Yes, but only after the loan is brought current. Most lenders require the delinquent balance to be paid before approving a VA loan assumption. Since the seller is behind $20K+, you’d need to clear that debt first before proceeding with the assumption.
2. How to Structure the Deal to Protect Your $20K
If you’re willing to cover the $20K arrears, here’s how to protect yourself:
Option 1: Secure Your Funds with a Lien or Escrow Agreement- Use an escrow account: Deposit the $20K into escrow with clear terms—if the assumption is denied, the funds return to you.
- Record a promissory note & lien: If the deal falls through, this would give you a legal claim against the property to recover your funds.
- Subject-to deal: Take over the existing loan payments before assumption approval, securing control.
- Escrowed deed transfer: The seller signs the deed into escrow only to be recorded after assumption approval, ensuring they can’t back out.
- Lease option fallback: If the assumption is denied, consider a lease option agreement until another solution is found.
- Ask the seller to carry a small second note for the $60K equity gap at favorable terms.
- Use your $20K as a down payment, structured as a secured loan against the property.
3. Additional Considerations
✅ Confirm assumption eligibility – Contact the lender directly before paying the arrears.
✅ Get everything in writing – Work with a real estate attorney to draft a contract protecting your funds.
✅ VA entitlement impact – If you assume the loan, check whether the seller's VA entitlement is released.
Final Thoughts
This deal has potential, but structuring it correctly is key. Ensure lender approval before bringing the mortgage current, and use escrow or a lien to protect your money. If assumption doesn’t work, consider a subject-to or seller-financed hybrid deal.
Would love to hear more details once you clarify the lender’s stance—keep us posted!
4 Replies
- 1yMike GrudzienPro MemberLender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
Get. An. Attorney.
An experienced real estate attorney that works with investors.... - 1yKo KashiwagiPro MemberLender · Los Angeles, CA · Member since 2022 · 967 posts · 445 votes
I would get a mortgage statement and payoff statement to get an exact idea of what you need to do to get current. You can double check the info by calling the lender/servicer
- Property Manager · Nashville, TN · Member since 2025 · 66 posts · 35 votes1y
How to Structure a Deal with a VA Loan Assumption & Mortgage Arrears
Hi Dani,
This is an interesting deal, and you’re right to be cautious. Here’s how you can navigate it:
1. Can a VA Loan Be Assumed If the Seller is Behind on Payments?
Yes, but only after the loan is brought current. Most lenders require the delinquent balance to be paid before approving a VA loan assumption. Since the seller is behind $20K+, you’d need to clear that debt first before proceeding with the assumption.
2. How to Structure the Deal to Protect Your $20K
If you’re willing to cover the $20K arrears, here’s how to protect yourself:
Option 1: Secure Your Funds with a Lien or Escrow Agreement- Use an escrow account: Deposit the $20K into escrow with clear terms—if the assumption is denied, the funds return to you.
- Record a promissory note & lien: If the deal falls through, this would give you a legal claim against the property to recover your funds.
- Subject-to deal: Take over the existing loan payments before assumption approval, securing control.
- Escrowed deed transfer: The seller signs the deed into escrow only to be recorded after assumption approval, ensuring they can’t back out.
- Lease option fallback: If the assumption is denied, consider a lease option agreement until another solution is found.
- Ask the seller to carry a small second note for the $60K equity gap at favorable terms.
- Use your $20K as a down payment, structured as a secured loan against the property.
3. Additional Considerations
✅ Confirm assumption eligibility – Contact the lender directly before paying the arrears.
✅ Get everything in writing – Work with a real estate attorney to draft a contract protecting your funds.
✅ VA entitlement impact – If you assume the loan, check whether the seller's VA entitlement is released.Final Thoughts
This deal has potential, but structuring it correctly is key. Ensure lender approval before bringing the mortgage current, and use escrow or a lien to protect your money. If assumption doesn’t work, consider a subject-to or seller-financed hybrid deal.
Would love to hear more details once you clarify the lender’s stance—keep us posted!
- 1yRyan ThomsonBusiness MemberReal Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes
@Dani Beit-Or I closed 7 of these deals last quarter as an agent in Colorado.
This is fully legal assumption process. No sub to risk. Here are the answers to your questions:
1. You can assume the loan, but the loan has to be made current first. This can be done at the same time as closing.
2. See above. Do it at closing.
The Assumable Guy544 Reviews
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