When Your Buyer "Assumes" Your VA Loan

When you own a home using the VA home loan program, you, as the veteran, have a benefit that follows you, and only you. You have no official restrictions on how you sell your home, or to whom you sell your home, except in cases where you want your buyer to assume your home loan.

There are two different, specific scenarios for selling your home to a buyer who will assume your VA loan:

• Was the home loan closed on or before March 1, 1988? If so, you can let your buyer assume your loan without any conditions from the VA or lender. You ought to consider taking steps to protect yourself, the seller, in case the buyer defaults on the assumed loan, as it is your VA loan benefit that they would default on. In this case, you get a letter of liability waiving you from being responsible for default.
• Was the home loan closed on or after March 2, 1988? If so, the VA and the lender must approve the choice of buyer.

Regardless of either scenario, you cannot take your VA benefit with you when you allow someone to assume your loan. The buyer is essentially using your VA benefit in this case. You can only take your VA home loan benefit with you if the buyer starts a completely new loan, with new terms, with the lender of their choice.

Even if the buyer for your property is a veteran with his or her own VA home loan benefit, unless they begin a completely new loan and does not assume your va loan, then your entitlement is tied up with the mortgage being assumed by the buyer. Once the mortgage is paid off in full, however, your VA home loan benefit is restored: you're VA home loan benefit is no longer being used, and you can resume using it for a different property if you see fit.

Before you choose to allow a buyer to assume your loan and VA home loan benefit, contact your regional VA office to discuss the specifics for your particular case.