Are VA Loans Assumable? Everything To Know About VA Loan Assumption

Are you asking yourself, “Are VA loans assumable?” The short answer is yes. Even borrowers without the usual military service qualifications may be able to tap into the cost savings of a VA loan. That’s because VA loans are assumable.

Let’s take a closer look at how this fact could impact your home buying prospects.

What Is A VA Assumable Loan?

An important thing to know about VA loans is that they are assumable. This means that a borrower can take over the terms of an existing VA loan, even if they are not eligible to take out a VA loan for themselves.

With that, the home buyer will have the same mortgage payment the home seller had. If the seller had a great interest rate locked in, the assumable nature of the loan can be a big selling point.

Most government loans are assumable loans. Most mortgages are not assumable. But this feature of the VA loan can act as a benefit for both buyers and sellers.

Who Can Assume A VA Loan?

While a VA loan is assumable, not just anyone can take advantage of this option.

When originally taking out a VA loan, the borrower must meet specific military service requirements. In addition to the service requirements, lenders will evaluate the borrower’s financial information to ensure they can repay the loan.

But when assuming a VA loan, the new borrower will not need to meet any military service requirements. With that, non-veterans can assume a VA loan. As with the original loan, the new borrower will need to prove their financial qualifications to the lender.

Requirements To Assume A VA Loan

Although borrowers without military service can assume a VA loan, the lender will need to approve the assumption.

As a borrower, the process will differ from taking out a new mortgage. Instead of shopping around for the best available rate, you’ll work with the seller’s lender to prove your creditworthiness. If the lender approves your financial qualifications, then you can move forward with a VA loan assumption.

The VA doesn’t publish minimum borrower requirements. But many lenders will only work with borrowers that meet certain financial criteria. Here are a few of the common requirements:

• Credit score: You’ll need to have a minimum median credit score of 580 to work with Rocket Mortgage^® for a VA loan.
• Down payment: A VA home loan typically doesn’t require a down payment. But the new borrower may need to make a down payment in some cases.
• Income: You’ll need to have enough income to support the loan amount.
• Funding fee: A VA loan assumption will come with a funding fee equal to 0.5% of the loan balance.

If you are considering a VA loan assumption as a path to homeownership, then meeting the requirements above is a great first step.

But keep in mind that each lender has its own standards. You may need to hit different financial requirements when working with different lenders. For example, it’s common for other lenders to require a 620 credit score, even though Rocket Mortgage is willing to work with borrowers that have a minimum median score of 580 on a VA loan.

How To Assume A VA Loan

As a borrower seeking to assume a VA loan, here are the steps you’ll need to take.

First, determine whether you meet the military service requirements for a VA loan. As a qualified veteran, you can use your VA loan eligibility to replace the seller's eligibility.

If you aren’t a qualified veteran, you’ll need to qualify for the mortgage based on your financial situation. In either case, the lender will require paperwork from you that verifies your income, outstanding debts, and creditworthiness.

The lender will determine your eligibility to assume the VA loan in question. Depending on the lender's speed, you may find out about your eligibility within hours or weeks.

If approved, you will need to sign off on the assumption, plus pay the funding fee and any required down payment.

How To Find A VA Assumable Mortgage

If you want to assume a VA loan, you’ll need to find one first. Here are some places to look for a VA loan to assume:

• A real estate agent: Ask your real estate agent to help you find homes with sellers who are willing to allow you to assume their VA loan.
• The multiple listing service: The MLS is a great resource for all shoppers. Talk to a real estate agent who has access to the MLS to find homes with VA assumable loans.
• Print ads: Checking the local ads could help you spot a deal. You might be surprised by what you find in your local paper!
• Specialized websites: Consider looking on websites like TakeList.com or