VA Loan Assumption: 3 Things You Should Know

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If you are a member or veteran of the military and have a VA (Department of Veterans Affairs) loan, there are several things you should know about a VA loan assumption before you agree to sell your house.

1. Divorce

The VA, not the lender, must approve the assumption in the case of divorce. The VA will let a mortgage be assumed with no restrictions if you are getting divorced from your co-borrower. The VA suggests that both you and the co-borrower sign an agreement whereby the co-borrower is held harmless in case the home is foreclosed on in the future.

2. VA Loans Closed before March 1, 1988

VA loans can be assumed if they were closed before March 1, 1988, but the assumption will be considered unrestricted since the new buyer will not have to get prior bank or VA approval. You are still responsible for any loan losses to the VA if there is a default, so you may decide not to allow the assumption to take place.

3. VA Loans Closed after March 1, 1988

Assumptions for VA loans made after March 1, 1988, are permitted only if the lender approves them. You are not responsible for any losses to the VA, which makes it safe for you to agree to this assumption.