VA Loans Q&A Google Hangout - Quicken Loans Zing Blog

Have you ever wondered what an assumable mortgage is? Maybe a better question is whether you’ve ever heard of an assumable mortgage. Either way, I’m sure you’ve heard that old saying about assuming things; the one that says, “When you assume something, you…” well, you know what it says. Did you ever assume that the saying about assumptions applied to assumable mortgages? I hope not.

Assumable Mortgage

Assuming a mortgage doesn’t have anything to do with that old saying about assumptions. All it means is that someone assumes, or takes over, someone else’s mortgage.

On our VA Loans Q&A with the Department of Veterans Affairs, Military.com and several other organizations, someone asked this two-part question: What is an assumable mortgage, and, if the veteran doesn’t use his or her VA loan benefit, can his or her children use the VA loan benefit through an assumable mortgage?

 

VA Loan Assumption

Anyone can assume a VA mortgage – as long as their income and credit qualify – but children of veterans can’t get VA loans themselves (unless, of course, they join the military as well). You have to be a current service member, veteran or surviving spouse of a veteran to qualify for a VA loan.

Here are a few of the main requirements for assuming a VA loan:

  • If the person assuming the loan isn’t a veteran, then the veteran will lose their remaining entitlement benefits because the VA benefit stays with the mortgage, not the individual.
  • There’s also a funding fee that must be paid: 0.5% of the existing principal balance. Either the original owner or the new mortgage holder can pay this fee.
  • Once the assumer gets approved for the loan and the county receives the new deed, the current owner is released from all liability for the mortgage.

In the Q&A, Terry Howell of Military.com also noted that both the Department of Veterans Affairs and the lender have to agree to the loan assumption.

For more info on assumable VA mortgages, check out the VA Q&A video below!



Do you have other questions about VA loans, assuming loans or assuming things in general (pretty sure we already covered that last part)? Contact a Home Loan Expert today!

 

 

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This Post Has 150 Comments

    1. You can, but you should be aware he might fight that because he may not be able to get another VA loan while you have his old VA loan if his full entitlement has already been used. Also, the servicer of the loan (the entity you make the payments to) has to approve the assumption. I hope this helps!

  1. Does Quicken always require that the new buyer to out down a 10% payment to assume a VA assumable mortgage?
    If not what are the criteria for Quicken to waive this sizeable down payment?

    1. Hi John:

      There are no specific down payments for assumptions. I see you’re working with us already, so I’m going to have someone from our team reach out to go over your situation.

  2. My ex husband passed, and my minor son has expressed that he would like to keep the home. The ex kept it in the divorce but refinanced and had my name removed.
    We are going through probate. I have not remarried, and he was a vet. I have been making the mortgage payments to avoid foreclosure. Would I be able to assume his VA loan and keep the house for our son?

    1. Hi Gena:

      I would talk to an estate lawyer about the legal implications. As long as you or your son get the house, you can always keep making payments whether you’re actually physically able to assume the loan or not. Assumption does provide the advantage that you would be able to refinance down the line if you wanted, but it doesn’t have to happen right away. The reason I would talk to a lawyer is I’m not sure the legal implications if it gets left to your son alone, because he’s not able to take on contracts to make payments. But you should be able to keep making the payments if it gets left to one or both of you. Hope this helps!

  3. My Father is a veteran. He and my mother live in a retirement community, so they do not currently own a house. My wife and I want to buy a house, but my dad wants to be the primary on the mortgage loan, put me on the loan with him, then get a VA loan to buy our house. Afterwards, I will assume the mortgage from him. Is this doable?

    1. Hi Bill:

      You don’t have to be a veteran to assume a VA loan. You can assume the mortgage from your father after he purchases the home with a VA loan. However, there are a few things you need to be aware of. First, you’ll need the Department of Veterans Affairs and your mortgage lender to agree on the VA loan assumption. If they agree, your mortgage lender will need to make sure your income and credit qualifies based on VA standards. When your father uses a VA loan to buy the house, please note that he will lose his remaining entitlement benefits because the VA benefit will stay with the mortgage. This means he will no longer be able to purchase a home using a VA loan. Additionally, there will be an assumption fee of 0.5% of the existing principal loan balance that you or your father will need to pay when the loan is passed to you. Before you assume the loan, the existing loan payments must be current, or if past-due, must be paid at or before closing. One you get approved to assume the loan and the county receives the new deed with your name on it, your father will no longer be liable for the mortgage- that responsibility will fall to you. Of course, the best way to find out if this is doable is by speaking with a Home Loan Expert at (888) 980-6716. They’ll be able to give you the best information for your situation. I hope this helps!

  4. Hello, I am about to assume a Veteran’s VA mortgage with a very good rate comparing mine. What are the risks and things I should be caution about? Does the bank do all the legal transfers with the title company and deed update? Thank you

    1. Hi John:
      There are no great risks. You work with the lender or loan servicer to assume the mortgage. You’ll have to talk to the lender or servicer about whether they would set up the title and deed transfers or you would. It’s my suspicion that most lenders or servicers will help you set it up or at least be able to recommend someone because they’re still involved in the sale even if one isn’t being paid off. You might still choose to get an appraisal independently of the lender, so you know you’re not overpaying for the property by taking on the current loan. That would be the one risk to watch out for. Hope this helps!

  5. I am currently living in a home my sister owns and has a VA loan on, she got married and moved in with her husband. I have been paying the mortgage, well I transfer the money to her and she sends the money to the bank. Anyway, my question is regarding child support, I received child support but it is not court ordered, it is for my 3 year old door so it will clearly continue for 3+ years, I have copies of checks going back since her birth showing continued payments. Will this be allowed as income or does it have to be court ordered?

    1. Hi Janet:

      The policies may vary based on whoever the lender is that’s handling the loan. That said, since VA loans are handled by the government, there may not be much variation in policies. In the absence of a court order, one thing you may be able to do is provide evidence of your child’s date of birth and a copy of applicable state law which states the conditions under which the payment of child support is required. Hope this helps!

      Thanks,
      Kevin

  6. My Dad refinanced the Home he and my mom bought together after my mom passed. It looks like the loan is a va loan through freedom mortgage. I moved in with him in 2015 when his health started declining. In 2017, he spoke to the mortgage company about putting my name on the house and they told him to add my name to deed, since it couldn’t be added to mortgage. So we put deed in both of our names. He told me that when he died not to worry about losing the house just to keep making the payments. He passed away in December. I know that what he told me is not the correct way to handle the situation, but I am afraid that I will lose the house if the mortgage company discovers he has passed. I have children and we cannot be homeless. What do I do?

    1. Hi Crystal:

      There’s no need to fear telling the mortgage company. It will help them get the bills sent to the right person. You don’t have to assume the loan if you can’t credit qualify. The lender won’t care who’s making the payments as long as they are made. That being said, telling the lender will help because that way they know who you are. If you get your credit fixed up in the future, you can then go to them about properly assuming the loan. There are advantages to this in that you would have the option of refinancing down the line if you were on the loan and it made financial sense. I hope this helps and I’m very sorry for your loss.

      Thanks,
      Kevin Graham

    1. Hi Troy:

      Unfortunately, one of the VA rules is that you have to live in the home. One potential option might be to get a multi-unit property and live in one of the units while renting the others out. I’m going to suggest you speak with one of our home loan experts by calling (888) 980-6716. They would be able to go over all of your potential options.

      Thanks,
      Kevin Graham

  7. My father passed away last year, leaving a home with a VA mortgage. I have been paying the payment, and my brothers and sisters want me to assume the mortgage. Is it possible for me to assume the loan?

    1. Hi Shannon:

      You can assume the loan. You just have to go ahead and credit qualify with the servicer of the loan. The first step is to go ahead and call them.

      Thanks,
      Kevin

  8. My husband is a Veteran. We are thinking of buying a house and putting our son on the deed with us. I would just like to know what happens to the VA loan if my husband and I die?

    1. Hi Deanna:

      If he’s on the deed, he can assume the payments if you and your husband pass. He just has to tell the mortgage company so they can begin to work on the process of transferring the loan into his name if and when the time comes.

      Thanks,
      Kevin Graham

  9. I’ve had a offer to buy my house and assume my VA loan. If the buyer defaults after assuming the loan am I as the original loan applicant now responsible for any default on new buyer is my SS /Giv pension at risk

    1. Hi Bob:

      Once the assumption is fully completed, they assume any responsibility for the loan. If they default, you’re not responsible and it won’t affect your Social Security or any pension you have.

      Thanks,
      Kevin

  10. Can my ex-husband request a assumption without me knowing if the house is not his anymore since i was awarded the house, and can he take his name off or fore me to refinance since i did not get a time frame to do so .The house is in both of our name and was purchase with a AV loan.

    1. Hi Kim:

      Your ex-husband can’t force you to refinance if there’s no written timeframe. With that being said, he won’t be able to get another home with a VA loan until you either refinance or pay off the loan completely. Just getting his name off the loan won’t help with that. Hope this helps!

      Thanks,
      Kevin

  11. my ex husband use his VA Loan to purchase a house and both of us name is on the house. I was awarded the house and will be making the payment on the house. My ex husband is trying to buy a new home using is VA to do so , but he requested an assumption with the lender without me knowing can he do that? since the house is not his anymore and how does this work if i do the assumption to get his name off the house?

    1. You can assume the loan. However, if you’re not a veteran, he cannot get another VA loan until the loan is paid off. Usually the way this works is that in your divorce agreement, you and your former husband would negotiate a specific amount of time you have to refinance into another loan that’s not a VA loan in order to let him purchase another home with a VA loan. I don’t know why he would be requesting the assumption if it’s your house.

      Thanks,
      Kevin

  12. My husband is a vet and we are considering assuming a VA mortgage. Is it possible to do this if our children also help with the loan? We would all be living in the house and we would all be paying for it.

    1. Hi Charlene:

      When someone other than the spouse of a veteran is on the loan along with the veteran, it’s considered a VA joint loan. Although we don’t do these particular loans, your experience may vary depending on the policies of the lender whose loan you’d be assuming. It’s possible. Hope this helps!

      Thanks,
      Kevin Graham

  13. We have received Pre-Approval from Quicken for a home loan. When we asked for information if my father (Vet) could purchase the home and my wife and assume the loan we were told by the Quicken loan specialist VA loans aren’t assumable… This sorta makes us hesitant to move forward with Quicken as it was a basic question of assumption… Could you point us in the direction or our specialist to be able to answer a question like: How long must the Vet hold the loan prior to assumption?

    1. Hi Ronald:

      VA loans are assumable. The only thing that happens if your father is a veteran and you aren’t is that when you assume the loan, he gives up his VA entitlement to purchase another home through the VA loan. That may or may not be a concern. Also, if you were going to assume the loan, you wouldn’t be getting a loan, your father would and then you would assume it down the line under the current terms of the loan whether your father went with us or anyone else. I think that may be where the confusion lies. But I can tell you that VA loans are absolutely assumable as long as they are assumed through the lender that did the loan. I’m going to get this over to our client relations team to look into your experience and see if we can get this straightened out. Thanks for reaching out!

      Kevin Graham

  14. I purchased a home us my VA loan benefits last year. I have since moved out of the home. Is it possible to have a parent assume this loan so I can use my VA loan benefit to buy a new home in my current location?

    1. Hi Shawn:

      It depends on whether one of your parents is a veteran. If your original VA loan is assumed by a nonveteran, you lose your VA entitlement to buy another house using a VA loan in the future. If they are a veteran, you can do this. Your other option would be to sell it and pay off the original loan.

      Thanks,
      Kevin Graham

  15. I am trying to assume a VA loan. If I do, does the person lose their entitlement for another VA loan forever or just until I refinance the loan into my name?
    Thank you.

    1. Hi Tammy:

      Loan assumption is a complex topic with various guidelines, particularly for the VA. Every situation is slightly different. My advice would be to have the person call our servicing team at 800-863-4332, we have an assumption team that could help go over their situation and see exactly how it affects them.

      Thanks,
      Kevin Graham

      1. I tried to call and ask questions, the lady I spoke with said that VA loans are not assumable. So I got no where calling this number. Just letting people know to not waste their time calling.

        1. Hi Nicole:

          Every situation is different, and I don’t know your circumstances. I can tell you that it is possible to assume a VA loan. I don’t know who you talk to, but I’m going to get this over to our Client Relations team to get any confusion cleared up.

          Thanks,
          Kevin

        1. Hi Andrew:

          When you assume a VA loan, you have to assume it through the servicer/lender who is responsible for the original loan. There are conditions that have to be met, but we absolutely let people assume the loans we service if they qualify under VA. I’m going to pass this along to our client relations team so we can have someone to talk to you further about this.

          Thanks,
          Kevin Graham

  16. Hello,

    I am the dependent of a veteran. My husband and I recently purchased a home in Sep of 2015 but we are now wanting to move again to live closer to family. I understand the concept of assuming a VA loan but I don’t know of anyone that has done it and am unsure how it would work. If I have my dad purchase the home that my husband and I want and we then assume the loan once the transaction is complete what are the out of pocket costs that my husband and I would have to pay? For example, we had to pay closing costs on the home we sold and also on the home we purchased (our current primary residence) which between the two homes was somewhere in the neighborhood of $30K or more. We definitely cannot afford to do that again so quickly after having just purchased in late 2015. But if my dad purchased the home and there were no closing costs involved that would be doable. Will you tell me more about how this could work for us? Thanks!

    1. Hi Ruth:

      There are a few concerns to think about here. Your dad can let you assume the loan, but if he does so, he gives up his VA entitlement and can’t get a VA loan again. If you do decide to move forward with the assumption, it has to be approved by the lender or loan servicer as well as the VA. I would start with whoever the bill is sent to, the lender or servicer, in order to get that process rolling if you move forward. Finally, you also have to credit qualify.

      In terms of fees, those vary depending on who is handling the transaction, so I would talk to the lender or servicer. However, in general, there’s a small processing fee and the funding fee which is a percentage of the loan amount. This last charge is the VA’s replacement for mortgage insurance. There’s more information in section 7 of this document from the VA. I hope this helps!

      Thanks,
      Kevin Graham

  17. My active duty husband and I currently own a home that we bought with his VA entitlement. We are renting the house out now and our renter is a retired Air Force veteran. He would like to buy the house and we are open to selling. He would substitute his entitlement for ours. We know that our lender and the VA have to approve the assumption by our renter. We would like to ask for more than our current mortgage pay off amount. My understanding is that our renter would have to come up with the difference between the pay off amount and the selling price, in cash or take out a new mortgage? Is this correct? Also, are standard closing costs associated with a VA assumption ? We do not have a realtor (and don’t want one since we’ve already got a buyer) and are trying to figure out exactly how to go about this process. Thanks for any info someone could give.

    1. Hi Jessica:

      You’re right. He would have to come up with the difference in cash or with another loan if you charge more than you owe on the mortgage. That’s between the two of you. He would pay the VA funding fee in place of mortgage insurance. That’s standard. There’s also title insurance to think about. The lender will have their own fees as well, but that varies. They are part of the approval process, so you’re going to end up talking to them anyway and that would probably be your first step. I agree that there’s no need to involve a realtor. Anyway, I would start by talking to your lender.

      Thanks,
      Kevin Graham

  18. My wife and I own a home that is through the VA. We used her certificate to purchase. We are now going our separate ways and I would like to assume the loan using my VA certificate. How do I accomplish this. Thank you.

    1. Hi Mike:

      The assumption ultimately has to be approved by your lender or servicer. I would start by calling them. If you happen to have your loan with us, I would get started by calling one of our Home Loan Experts at (800) 863-4332. They’ll be able to walk you through the process. Thank you very much for your service!

      Thanks,
      Kevin Graham

  19. I am a surviving spouse of a veteran and considering selling my home which has VA financing through my late husband. What is the down side to me if I were to offer to my stepson for him to assume this VA loan (besides the fact that I put a good deal of money into remodeling the home since it was purchased a year ago)?

    1. Hi Debbie:

      The only downside is that you would lose your option to purchase a home through the VA in the future if your son assumes the loan.

      Thanks,
      Kevin Graham

  20. my daughter will eventually have to assume my v.a. mortgage upon my death, I know she would have to qualify, but does that mean that she will also have to pay all the fees that I was granted not to pay, such as zero down, no mortgage insurance, and since I am a disabled vet., they also waived the funding fee, so upon assumption, will these benefits be passed on to my daughter or will she have pay them?

    1. If she inherits the mortgage upon your death, she doesn’t have to credit qualify. After that, it’s a straight assumption so all the benefits that the current loan has would carryover.

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