VA Assumable Loan as a Civilian

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The veteran seller would be a fool to agree to it.

We are in the process of buying a home where we are assuming a VA loan (2.75%) but my spouse has VA eligibility, so the seller will not lose theirs.

There were three offers on the house:
Offer 1 was doing a conventional loan but offered less than asking

Offer 2 offered asking, but was a civilian wanting to assume their VA loan

Offer 3 (us) offered asking, wanted to assume their VA loan, but would use our own eligibility.
Obviously ours was the strongest offer.

Unless you are buying in a strong buyers market and the seller is desparate, I think you will have a difficult time getting the seller to agree to it.

We both have VA eligibility. Only using mine on our current house, so I would have no issue having a civilian assume the loan. I think there are quite a few dual veteran households.

PP you quoted here. I've been discussing this with my husband a lot so I'm responding again.

I still think it would be a bad idea for you to allow a random civilian to assume your VA loan. Sure, you'd still have your spouse's VA eligibility, but what if you get divorced? Or what if your spouse dies? Your eligibility could still be tied up for decades and you can no longer use your spouse's VA benefits.

I've also read that if the civilian defaults on the loan, it can negatively impact the veteran who originally held it.

I can really only think of a few situations where it would be a good idea for a veteran to allow a civilian to assume their loan:

1. If the civilian buyer is their own child. As parents, we make all kinds of huge sacrifices for our children, so I can understand that in some situations, this would be a sacrifice a parent would be willing to make.

2. If the seller was absolutely desperate and facing imminent foreclosure.

3. If the veteran home owner is dead. If they are dead, they won't be able to use their eligibility again anyway, so it would make sense that the veteran's heirs would be willing to allow a buyer to assume it (if it's allowed under VA rules? I don't even know that as a fact, but if it is allowed...)

It does not affect credit if the civilian defaults. We are not looking to sell, but I have a house that we owe approx $1.65 m on at a 2.5% interest and it is valued at about $2.35 m right now. I suspect we could get more than the $2.35 if it came with assuming the $1.65 at 2.5%. The benefits of having a VA home loan for me would be minimal if we could make more money off the house.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The veteran seller would be a fool to agree to it.

We are in the process of buying a home where we are assuming a VA loan (2.75%) but my spouse has VA eligibility, so the seller will not lose theirs.

There were three offers on the house:
Offer 1 was doing a conventional loan but offered less than asking

Offer 2 offered asking, but was a civilian wanting to assume their VA loan

Offer 3 (us) offered asking, wanted to assume their VA loan, but would use our own eligibility.
Obviously ours was the strongest offer.

Unless you are buying in a strong buyers market and the seller is desparate, I think you will have a difficult time getting the seller to agree to it.

We both have VA eligibility. Only using mine on our current house, so I would have no issue having a civilian assume the loan. I think there are quite a few dual veteran households.

PP you quoted here. I've been discussing this with my husband a lot so I'm responding again.

I still think it would be a bad idea for you to allow a random civilian to assume your VA loan. Sure, you'd still have your spouse's VA eligibility, but what if you get divorced? Or what if your spouse dies? Your eligibility could still be tied up for decades and you can no longer use your spouse's VA benefits.

I've also read that if the civilian defaults on the loan, it can negatively impact the veteran who originally held it.

I can really only think of a few situations where it would be a good idea for a veteran to allow a civilian to assume their loan:

1. If the civilian buyer is their own child. As parents, we make all kinds of huge sacrifices for our children, so I can understand that in some situations, this would be a sacrifice a parent would be willing to make.

2. If the seller was absolutely desperate and facing imminent foreclosure.

3. If the veteran home owner is dead. If they are dead, they won't be able to use their eligibility again anyway, so it would make sense that the veteran's heirs would be willing to allow a buyer to assume it (if it's allowed under VA rules? I don't even know that as a fact, but if it is allowed...)

It does not affect credit if the civilian defaults. We are not looking to sell, but I have a house that we owe approx $1.65 m on at a 2.5% interest and it is valued at about $2.35 m right now. I suspect we could get more than the $2.35 if it came with assuming the $1.65 at 2.5%. The benefits of having a VA home loan for me would be minimal if we could make more money off the house.

I had no idea you could get VA loans that high!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The veteran seller would be a fool to agree to it.

We are in the process of buying a home where we are assuming a VA loan (2.75%) but my spouse has VA eligibility, so the seller will not lose theirs.

There were three offers on the house:
Offer 1 was doing a conventional loan but offered less than asking

Offer 2 offered asking, but was a civilian wanting to assume their VA loan

Offer 3 (us) offered asking, wanted to assume their VA loan, but would use our own eligibility.
Obviously ours was the strongest offer.

Unless you are buying in a strong buyers market and the seller is desparate, I think you will have a difficult time getting the seller to agree to it.

We both have VA eligibility. Only using mine on our current house, so I would have no issue having a civilian assume the loan. I think there are quite a few dual veteran households.

PP you quoted here. I've been discussing this with my husband a lot so I'm responding again.

I still think it would be a bad idea for you to allow a random civilian to assume your VA loan. Sure, you'd still have your spouse's VA eligibility, but what if you get divorced? Or what if your spouse dies? Your eligibility could still be tied up for decades and you can no longer use your spouse's VA benefits.

I've also read that if the civilian defaults on the loan, it can negatively impact the veteran who originally held it.

I can really only think of a few situations where it would be a good idea for a veteran to allow a civilian to assume their loan:

1. If the civilian buyer is their own child. As parents, we make all kinds of huge sacrifices for our children, so I can understand that in some situations, this would be a sacrifice a parent would be willing to make.

2. If the seller was absolutely desperate and facing imminent foreclosure.

3. If the veteran home owner is dead. If they are dead, they won't be able to use their eligibility again anyway, so it would make sense that the veteran's heirs would be willing to allow a buyer to assume it (if it's allowed under VA rules? I don't even know that as a fact, but if it is allowed...)

It does not affect credit if the civilian defaults. We are not looking to sell, but I have a house that we owe approx $1.65 m on at a 2.5% interest and it is valued at about $2.35 m right now. I suspect we could get more than the $2.35 if it came with assuming the $1.65 at 2.5%. The benefits of having a VA home loan for me would be minimal if we could make more money off the house.

I had no idea you could get VA loans that high!

Yep there is no real limit - it is all waivable.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The veteran seller would be a fool to agree to it.

We are in the process of buying a home where we are assuming a VA loan (2.75%) but my spouse has VA eligibility, so the seller will not lose theirs.

There were three offers on the house:
Offer 1 was doing a conventional loan but offered less than asking

Offer 2 offered asking, but was a civilian wanting to assume their VA loan

Offer 3 (us) offered asking, wanted to assume their VA loan, but would use our own eligibility.
Obviously ours was the strongest offer.

Unless you are buying in a strong buyers market and the seller is desparate, I think you will have a difficult time getting the seller to agree to it.

We both have VA eligibility. Only using mine on our current house, so I would have no issue having a civilian assume the loan. I think there are quite a few dual veteran households.

PP you quoted here. I've been discussing this with my husband a lot so I'm responding again.

I still think it would be a bad idea for you to allow a random civilian to assume your VA loan. Sure, you'd still have your spouse's VA eligibility, but what if you get divorced? Or what if your spouse dies? Your eligibility could still be tied up for decades and you can no longer use your spouse's VA benefits.

I've also read that if the civilian defaults on the loan, it can negatively impact the veteran who originally held it.

I can really only think of a few situations where it would be a good idea for a veteran to allow a civilian to assume their loan:

1. If the civilian buyer is their own child. As parents, we make all kinds of huge sacrifices for our children, so I can understand that in some situations, this would be a sacrifice a parent would be willing to make.

2. If the seller was absolutely desperate and facing imminent foreclosure.

3. If the veteran home owner is dead. If they are dead, they won't be able to use their eligibility again anyway, so it would make sense that the veteran's heirs would be willing to allow a buyer to assume it (if it's allowed under VA rules? I don't even know that as a fact, but if it is allowed...)

It does not affect credit if the civilian defaults. We are not looking to sell, but I have a house that we owe approx $1.65 m on at a 2.5% interest and it is valued at about $2.35 m right now. I suspect we could get more than the $2.35 if it came with assuming the $1.65 at 2.5%. The benefits of having a VA home loan for me would be minimal if we could make more money off the house.

Yes, but the buyer has to be able to come with a payment equal to the appreciation in the house. Most can’t. You can’t keep the VA loan and combine it with another mortgage. They have to be able to make up the difference between your mortgage balance and the contract price.

[Anonymous]

Anonymous wrote:OP are you still here?
I'm just nosy and like the pp above me, am really curious what the situation is?
Do you already have an accepted offer on a house, using assuming their VA loan? Or were you just hoping to make such an offer?

OP here! No current contract underway. I'm just exploring options at this point and curious. I recently learned that it is legal for civilians to assume VA loans, so I created this post to try to learn more. Assuming a loan with an ultra-low pandemic-era interest rate would increase our buying power significantly compared to current interest rates... but most assumable loans are VA loans, and my household is entirely civilian. Hence the question.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP are you still here?
I'm just nosy and like the pp above me, am really curious what the situation is?
Do you already have an accepted offer on a house, using assuming their VA loan? Or were you just hoping to make such an offer?

OP here! No current contract underway. I'm just exploring options at this point and curious. I recently learned that it is legal for civilians to assume VA loans, so I created this post to try to learn more. Assuming a loan with an ultra-low pandemic-era interest rate would increase our buying power significantly compared to current interest rates... but most assumable loans are VA loans, and my household is entirely civilian. Hence the question.

Doesn't hurt to ask, I guess. I was surprised to learn this was even allowed, and even more surprised to read here that some posters would be fine giving up their VA loan.
A pp already mentioned this, but I wanted to emphasize, that you need to come up with the difference in the sales price and the loan. So say for example, you are buying the house for $800k, and the veteran seller still owes $500,000 on their VA loan. You need to come up with that $300k difference--you can't use the VA loan to finance more than what the original loan holder took out.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The veteran seller would be a fool to agree to it.

We are in the process of buying a home where we are assuming a VA loan (2.75%) but my spouse has VA eligibility, so the seller will not lose theirs.

There were three offers on the house:
Offer 1 was doing a conventional loan but offered less than asking

Offer 2 offered asking, but was a civilian wanting to assume their VA loan

Offer 3 (us) offered asking, wanted to assume their VA loan, but would use our own eligibility.
Obviously ours was the strongest offer.

Unless you are buying in a strong buyers market and the seller is desparate, I think you will have a difficult time getting the seller to agree to it.

We both have VA eligibility. Only using mine on our current house, so I would have no issue having a civilian assume the loan. I think there are quite a few dual veteran households.

PP you quoted here. I've been discussing this with my husband a lot so I'm responding again.

I still think it would be a bad idea for you to allow a random civilian to assume your VA loan. Sure, you'd still have your spouse's VA eligibility, but what if you get divorced? Or what if your spouse dies? Your eligibility could still be tied up for decades and you can no longer use your spouse's VA benefits.

I've also read that if the civilian defaults on the loan, it can negatively impact the veteran who originally held it.

I can really only think of a few situations where it would be a good idea for a veteran to allow a civilian to assume their loan:

1. If the civilian buyer is their own child. As parents, we make all kinds of huge sacrifices for our children, so I can understand that in some situations, this would be a sacrifice a parent would be willing to make.

2. If the seller was absolutely desperate and facing imminent foreclosure.

3. If the veteran home owner is dead. If they are dead, they won't be able to use their eligibility again anyway, so it would make sense that the veteran's heirs would be willing to allow a buyer to assume it (if it's allowed under VA rules? I don't even know that as a fact, but if it is allowed...)

It does not affect credit if the civilian defaults. We are not looking to sell, but I have a house that we owe approx $1.65 m on at a 2.5% interest and it is valued at about $2.35 m right now. I suspect we could get more than the $2.35 if it came with assuming the $1.65 at 2.5%. The benefits of having a VA home loan for me would be minimal if we could make more money off the house.

I had no idea you could get VA loans that high!

This doesn’t sound right. There are limits.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The veteran seller would be a fool to agree to it.

We are in the process of buying a home where we are assuming a VA loan (2.75%) but my spouse has VA eligibility, so the seller will not lose theirs.

There were three offers on the house:
Offer 1 was doing a conventional loan but offered less than asking

Offer 2 offered asking, but was a civilian wanting to assume their VA loan

Offer 3 (us) offered asking, wanted to assume their VA loan, but would use our own eligibility.
Obviously ours was the strongest offer.

Unless you are buying in a strong buyers market and the seller is desparate, I think you will have a difficult time getting the seller to agree to it.

We both have VA eligibility. Only using mine on our current house, so I would have no issue having a civilian assume the loan. I think there are quite a few dual veteran households.

PP you quoted here. I've been discussing this with my husband a lot so I'm responding again.

I still think it would be a bad idea for you to allow a random civilian to assume your VA loan. Sure, you'd still have your spouse's VA eligibility, but what if you get divorced? Or what if your spouse dies? Your eligibility could still be tied up for decades and you can no longer use your spouse's VA benefits.

I've also read that if the civilian defaults on the loan, it can negatively impact the veteran who originally held it.

I can really only think of a few situations where it would be a good idea for a veteran to allow a civilian to assume their loan:

1. If the civilian buyer is their own child. As parents, we make all kinds of huge sacrifices for our children, so I can understand that in some situations, this would be a sacrifice a parent would be willing to make.

2. If the seller was absolutely desperate and facing imminent foreclosure.

3. If the veteran home owner is dead. If they are dead, they won't be able to use their eligibility again anyway, so it would make sense that the veteran's heirs would be willing to allow a buyer to assume it (if it's allowed under VA rules? I don't even know that as a fact, but if it is allowed...)

It does not affect credit if the civilian defaults. We are not looking to sell, but I have a house that we owe approx $1.65 m on at a 2.5% interest and it is valued at about $2.35 m right now. I suspect we could get more than the $2.35 if it came with assuming the $1.65 at 2.5%. The benefits of having a VA home loan for me would be minimal if we could make more money off the house.

I had no idea you could get VA loans that high!

This doesn’t sound right. There are limits.

As of 2020, if you have full entitlement there is no loan limit.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP are you still here?
I'm just nosy and like the pp above me, am really curious what the situation is?
Do you already have an accepted offer on a house, using assuming their VA loan? Or were you just hoping to make such an offer?

OP here! No current contract underway. I'm just exploring options at this point and curious. I recently learned that it is legal for civilians to assume VA loans, so I created this post to try to learn more. Assuming a loan with an ultra-low pandemic-era interest rate would increase our buying power significantly compared to current interest rates... but most assumable loans are VA loans, and my household is entirely civilian. Hence the question.

Doesn't hurt to ask, I guess. I was surprised to learn this was even allowed, and even more surprised to read here that some posters would be fine giving up their VA loan.
A pp already mentioned this, but I wanted to emphasize, that you need to come up with the difference in the sales price and the loan. So say for example, you are buying the house for $800k, and the veteran seller still owes $500,000 on their VA loan. You need to come up with that $300k difference--you can't use the VA loan to finance more than what the original loan holder took out.

I'm aware, but the equity payment is in lieu of a down payment. There is no down payment when assuming a loan, just covering the equity gap. If someone bought in 2020 and snagged a 2.5% interest rate, they only have 5 years of payments behind them, so the equity may only be between 10% and 20% of the home value... so, no more than a down payment. Obviously if they have more years of mortgage payments behind them, you could be talking about a much higher % of the home's value.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP are you still here?
I'm just nosy and like the pp above me, am really curious what the situation is?
Do you already have an accepted offer on a house, using assuming their VA loan? Or were you just hoping to make such an offer?

OP here! No current contract underway. I'm just exploring options at this point and curious. I recently learned that it is legal for civilians to assume VA loans, so I created this post to try to learn more. Assuming a loan with an ultra-low pandemic-era interest rate would increase our buying power significantly compared to current interest rates... but most assumable loans are VA loans, and my household is entirely civilian. Hence the question.

Doesn't hurt to ask, I guess. I was surprised to learn this was even allowed, and even more surprised to read here that some posters would be fine giving up their VA loan.
A pp already mentioned this, but I wanted to emphasize, that you need to come up with the difference in the sales price and the loan. So say for example, you are buying the house for $800k, and the veteran seller still owes $500,000 on their VA loan. You need to come up with that $300k difference--you can't use the VA loan to finance more than what the original loan holder took out.

I'm aware, but the equity payment is in lieu of a down payment. There is no down payment when assuming a loan, just covering the equity gap. If someone bought in 2020 and snagged a 2.5% interest rate, they only have 5 years of payments behind them, so the equity may only be between 10% and 20% of the home value... so, no more than a down payment. Obviously if they have more years of mortgage payments behind them, you could be talking about a much higher % of the home's value.

Home values have increased substantially in many places.
I’m a pp in this thread that is currently under context to assume a VA loan. Our sellers purchased in 2019 for roughly $350k, and we will be buying for roughly $600k (this is not in the DC area.)
So in order to assume their loan, we have to put down $250k.

[Anonymous]

^
Sorry that should say “under contract” not “under context”

[Anonymous]

And sorry, it’s me back again.

Also, in addition to propert values in the area going up in general, our sellers also made some improvements to the property which increased its value.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP are you still here?
I'm just nosy and like the pp above me, am really curious what the situation is?
Do you already have an accepted offer on a house, using assuming their VA loan? Or were you just hoping to make such an offer?

OP here! No current contract underway. I'm just exploring options at this point and curious. I recently learned that it is legal for civilians to assume VA loans, so I created this post to try to learn more. Assuming a loan with an ultra-low pandemic-era interest rate would increase our buying power significantly compared to current interest rates... but most assumable loans are VA loans, and my household is entirely civilian. Hence the question.

Doesn't hurt to ask, I guess. I was surprised to learn this was even allowed, and even more surprised to read here that some posters would be fine giving up their VA loan.
A pp already mentioned this, but I wanted to emphasize, that you need to come up with the difference in the sales price and the loan. So say for example, you are buying the house for $800k, and the veteran seller still owes $500,000 on their VA loan. You need to come up with that $300k difference--you can't use the VA loan to finance more than what the original loan holder took out.

I'm aware, but the equity payment is in lieu of a down payment. There is no down payment when assuming a loan, just covering the equity gap. If someone bought in 2020 and snagged a 2.5% interest rate, they only have 5 years of payments behind them, so the equity may only be between 10% and 20% of the home value... so, no more than a down payment. Obviously if they have more years of mortgage payments behind them, you could be talking about a much higher % of the home's value.

You’re not factoring in appreciation there, either. PP who posted that we offered a home with a VA loan. Redfin shows the value at 1.09 in 2021 and we sold last year for 1.7. Those numbers aren’t super accurate but it was at least a half million during that time period in appreciation alone.

Good luck finding a home that was purchased within the last five years, has an assumable VA loan that they are willing to give up, is what you are looking for, and you have your bid accepted on. I mean maybe it can happen but that’s highly unlikely.

[Anonymous]

So if you are able to make up the difference between the VA loan and the asking price in cash, is this a no brainer?

[Anonymous]

Anonymous wrote:So if you are able to make up the difference between the VA loan and the asking price in cash, is this a no brainer?

If it’s a super low interest rate and the seller is willing to allow it, then I would say it’s a no brainer.