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. Thats because VA loans are assumable.
Who Can Assume A VA Loan?
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 borrowers 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
As a borrower, the process will differ from taking out a new mortgage . Instead of shopping around for the best available rate, youll work with the sellers lender to prove your creditworthiness. If the lender approves your financial qualifications, then you can move forward with a VA loan assumption.
The VA doesnt publish minimum borrower requirements. But many lenders will only work with borrowers that meet certain financial criteria. official website Here are a few of the common requirements:
- Credit score: Youll 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 doesnt require a down payment. But the new borrower may need to make a down payment in some cases.
- Income: Youll 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, its 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
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 arent a qualified veteran, youll 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, youll 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.
- Themultiple 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 or Zumption to find sellers willing to undergo the assumption process.
Although it may take some time to find the right home with an assumable loan option, it could be worth the wait.
VA Loan Entitlement After An Assumption
If the new borrower has a sufficient VA loan entitlement, the seller can ask to officially substitute the entitlements. But if the new borrower doesnt have an adequate entitlement to make the substitution, then the sellers entitlement will remain attached to the home until the loan is paid off.
As a seller, its critical to confirm whether the borrower has sufficient entitlements for a substitution. Otherwise, your VA entitlement would stay attached to this home and prevent you from using it elsewhere until the loan is paid off.
See what you’re eligible for.
Rocket Mortgage ® uses information about your income, assets and credit to show you which mortgage options make sense for you.
