Assumable VA loans

VA assumption

A VA loan assumption lets a buyer take over the seller's existing VA loan, including its rate and remaining balance. When rates are higher than the seller's rate, that can make a home much more affordable. Assumptions need lender approval and take some planning, so it helps to understand the moving parts before you write an offer.

How an assumption works

• The buyer applies with the seller's loan servicer, which reviews credit and income much like a new loan.
• The buyer covers the difference between the price and the loan balance with cash or, in some cases, a second loan.
• The VA funding fee on an assumption is 0.5% of the balance unless the buyer is exempt.
• The servicer's processing charge is capped by VA regulation.
• Once approved, the buyer takes over the payments and the seller can be released from liability.

Substitution of entitlement, step by step

When the servicer approves an assumption, VA treats it as a release of liability: the seller is no longer personally liable for the loan. A release of liability doesn't give the seller's entitlement back, though (M26-7, Chapter 5). The entitlement comes back only through a substitution of entitlement, and VA requires all of the following:

• The assumption closes with a release of liability.
• The buyer is an eligible veteran with at least as much available entitlement as the seller's loan uses.
• The buyer certifies that they will live in the home.
• The buyer agrees to the substitution and signs VA Form 26-8106, the statement of a veteran assuming a VA loan.
• The servicer sends VA both veterans' Certificates of Eligibility with the package.

Once VA processes the substitution, the seller's entitlement is restored and ready for the next VA loan. The buyer's entitlement then stays with the assumed loan until it's paid off. VA also has the seller sign VA Form 26-10291, an assumption entitlement acknowledgement, no later than closing, so the seller sees in writing what the assumption does to their entitlement (VA Circular 26-24-9).

Without substitution. If a non-veteran assumes, or a veteran buyer doesn't substitute, VA says the seller's entitlement stays tied to the loan until it's paid in full (VA Circular 26-23-10). The seller may still have enough remaining entitlement to buy again; VA entitlement and second VA loans shows the math.

Timing. VA Circular 26-23-10 tells servicers with automatic authority to decide within 45 calendar days of receiving a complete assumption application. Build that time, plus any substitution paperwork, into the contract.

Sources: M26-7 Chapter 5, assumptions, VA Circular 26-23-10, VA Circular 26-24-9, VA eligibility and entitlement restoration (va.gov).

Is an assumption right for you?

An assumption can make sense when the existing rate is well below today's rates and the gap between price and balance is manageable. It may not fit if the gap is large or the timeline is tight, since servicer approvals can take longer than a new loan. A FLO Mortgage loan officer can compare an assumption with a new VA loan side by side.

More VA loan guides

• VA home loans overview
• VA loan questions, answered
• VA loan tools and calculators
• VA home buying roadmap
• VA loans for first-time buyers
• VA loans for active duty
• VA loans for Guard and Reserve
• VA appraisals and property requirements
• VA closing costs and seller concessions
• VA occupancy rules
• VA entitlement and second VA loans
• VA condos and property types
• VA manual underwriting
• Disabled veteran property tax exemptions
• VA streamline refinance (IRRRL)
• VA cash-out refinance
• VA funding fee exemption
• VA loans for surviving spouses
• VA residual income explained
• VA loans after bankruptcy or foreclosure

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This is not a commitment to lend. All loans are subject to credit approval, underwriting guidelines, property eligibility and program availability. Lender requirements may be stricter than the program guidelines described here. Not all applicants will qualify. Figures reflect 2026 VA guidelines and may change without notice. FLO Mortgage is licensed in Florida, Georgia, Michigan, North Carolina, Tennessee and Texas. Company NMLS #1835856. Equal Housing Opportunity. FLO Mortgage is not affiliated with or endorsed by the U.S. Department of Veterans Affairs or any government agency. Licensing & Disclosures.