Buying process
Assuming a VA loan: how to take over a seller’s low rate
Short answer
A VA loan assumption lets a buyer take over a seller’s existing VA mortgage, including its interest rate and remaining balance. Anyone who qualifies with the loan servicer can assume a VA loan, veteran or not. The buyer pays a 0.5% VA funding fee and must bring cash or a second loan to cover the gap between the price and the balance. The seller’s entitlement is freed only if a veteran buyer substitutes their own.
How an assumption works
- Find an assumable home. Any VA loan can be assumed with servicer approval. Ask the listing agent for the current balance, rate and servicer.
- Apply with the servicer. The servicer, not a lender you choose, reviews your credit and income to the same standard as a new VA borrower.
- Cover the equity gap. You pay the difference between the price and the loan balance in cash or with a second mortgage.
- Get approval. VA requires servicers to decide within 45 calendar days of a complete application. In practice it often takes longer.
- Close. You pay the 0.5% funding fee (unless exempt) and normal Illinois closing costs, including attorney review.
The equity gap, with a Chicago example
| Item | Example |
|---|---|
| Purchase price | $400,000 |
| Seller’s remaining VA loan balance | $300,000 |
| Equity gap the buyer must cover | $100,000 |
| VA funding fee on the assumed balance (0.5%) | $1,500 |
Example figures. Closing costs and the 0.75% Chicago transfer tax are on top.
What happens to the seller’s entitlement
| Buyer | Seller’s entitlement |
|---|---|
| Eligible veteran who substitutes entitlement | Restored to the seller after release of liability |
| Non-veteran, or veteran who does not substitute | Stays tied to the loan until it is paid off or refinanced |
Sellers should ask for a release of liability in every assumption, so they are no longer responsible if the buyer stops paying. Only a veteran buyer with enough entitlement can do a substitution of entitlement.
When an assumption makes sense
- The seller’s rate is well below today’s rates and the balance is a large share of the price.
- You have cash for the equity gap, or a lender willing to make a second mortgage behind the VA loan.
- You can wait longer than a normal 30- to 45-day closing.
Common questions
Can a non-veteran assume a VA loan?
Yes. Any buyer who meets the servicer’s credit and income standards can assume a VA loan. The seller’s VA entitlement stays tied to the loan unless a veteran buyer substitutes their own.
What is the funding fee on a VA loan assumption?
0.5% of the loan balance being assumed, unless the buyer is exempt, such as a veteran receiving VA disability compensation.
How long does a VA assumption take?
VA requires servicers to decide within 45 calendar days of a complete application, but many take longer because of staffing.
Sources
What will your VA funding fee be?
Enter a price and down payment to see the 2026 fee, or check whether you are exempt.
An independent guide. Not affiliated with or endorsed by the U.S. Department of Veterans Affairs, and not a lender. General information, not legal, tax or financial advice.