In short: Every VA loan is assumable, which means a qualified buyer can take over your existing loan, including its interest rate, with the servicer's approval. The buyer typically pays a 0.5% VA funding fee on the loan balance and must cover the difference between your loan balance and the sale price. The key point for sellers is your VA entitlement: it stays tied to the loan unless the buyer is an eligible veteran who substitutes their own entitlement.
If you bought or refinanced when rates were low, your mortgage may be one of your home's best selling points. In Hampton Roads, where so many homeowners have VA loans, an assumable low rate can help your listing stand out.
How a VA loan assumption works
- You and the buyer agree on a sale price, and the contract says the buyer will assume your loan.
- The buyer applies with your loan servicer and must qualify on credit and income.
- The buyer pays the "equity gap," the difference between your loan balance and the sale price, in cash or with a second loan.
- The buyer pays a VA funding fee of 0.5% of the loan balance unless they're exempt.
- At closing, the buyer takes over your loan at your rate and remaining term.
The big question: your VA entitlement
Your entitlement is the part of your VA benefit that backs the loan. When someone assumes your loan:
- If the buyer is an eligible veteran who substitutes their entitlement, yours can be restored, so you can use your full VA benefit again for your next home.
- If the buyer is a civilian or doesn't substitute, your entitlement stays tied to that loan until it's paid off. You may still have remaining entitlement for another purchase, but it can limit you.
Always ask for a release of liability so you're no longer responsible for the loan after the sale.
Why buyers want assumable loans
A lower interest rate can mean a much lower monthly payment than a new loan at today's rates. That can make your home more affordable to buyers and help it sell faster, or support a stronger price.
The challenges
- The equity gap. If you have a lot of equity, the buyer needs substantial cash or second financing.
- Timelines. Servicers can take longer to process assumptions than a regular loan approval, so build extra time into your contract.
- Your next purchase. If your entitlement isn't restored, plan ahead with your lender.
How to market an assumable VA loan
- Confirm your current rate, balance, and servicer's assumption process before listing.
- Feature the rate and estimated payment prominently in your listing.
- Decide up front whether you'll require a veteran buyer who substitutes entitlement.
Thinking about selling with an assumable loan?
We help Hampton Roads sellers market assumable VA and FHA loans and plan around entitlement. Learn more on our military page or contact us for a free equity check.
Sources: VA Loan Guidebook: Assuming a VA loan; USA Today: How VA loan assumptions work; VA.gov: Funding fee and closing costs. Figures are for general information and can change; contact us for advice on your specific situation.
Frequently asked questions
Yes. Civilians can assume a VA loan if the servicer approves them. But your VA entitlement stays tied to the loan until it's paid off unless an eligible veteran buyer substitutes their own entitlement.
The buyer usually pays a VA funding fee of 0.5% of the loan balance (unless exempt), plus normal closing costs and the equity gap between the loan balance and the sale price.
Only if the buyer is an eligible veteran who substitutes their entitlement for yours. Otherwise, your entitlement remains tied to that loan until it is paid off. Also request a release of liability.
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