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Navigating the VA Loan Assumption Process: A Guide for Veterans and Homebuyers

Monday, January 16, 2023

What Every Home Buyer Should Know About VA Loan Assumption

The VA loan assumption process is a way for a homebuyer who is also a veteran to assume the current VA loan of a seller. This can be a great option for buyers who are looking for a lower interest rate on their mortgage.

Step 1: Find sellers with VA loans. You can have your real estate agent search the MLS for sellers with VA loans to find homes that will work.

Step 2: Identify the seller's current mortgage company.

Step 3: Call the lender to find out any specific requirements the buyer needs to fulfill.

Some things to keep in mind:

Some lenders, like VHDA (Virginia Housing), require buyers to be first-time buyers in order to qualify. Other lenders don't have this requirement.

During the time the buyer has the property, the seller temporarily loses their VA eligibility. However, they regain it once they refinance or sell the property.

Two additional forms, 26-3282 and 26-6381, need to be filled out.

Any amount over the assumed amount needs to be paid in cash by the buyer or obtained through a second mortgage.

The approval of the assumption with the Veterans Administration takes 90-120 days to complete before you can close.

The buyer has to use the same lender as the seller has a current loan with.

The buyer must be a veteran with eligibility form.

For example, let's say a homeowner purchased a home within the last 3 years where the rates were 2.5-4% and is now selling their home. This homeowner is a veteran and used their VA eligibility to purchase. Their VA loan is now 400k and it states assumable on it. The current homeowner decides to sell and the current interest rates are 6-8%. A buyer who is also a veteran and planning to purchase using their VA loan eligibility sees this home on the market and falls in love with it. In negotiation, the buyer writes up an offer that states on the VA Financing Addendum they are wanting to assume the mortgage at the seller's current rate (2.4%). The seller contacts their lender to get the Forms 26-6382 and 26-6381, fills out their portion and sends it to the buyer to fill out their portion and sends it to the seller's lender. The buyer then calls the seller's lender and goes through an approval process for a home loan. The buyer determines whether he can put down any difference in cash or whether he needs a second mortgage plus down payment. The assumption is started, the seller's lender contacts the Veterans Administration, and the whole process takes 90 days to approve.

Keep in mind that during an assumption, there is no appraisal required. Only veterans, active military members, reservists, national guard, surviving spouses, and in some cases, surviving family members who are not veterans can assume a loan.

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