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Assumption of Mortgage

Definition Assumption of Mortgage is a VA benefits term that refers to the process in which a buyer takes over the existing mortgage of a property from the current homeowner. By assuming the mortgage, the buyer agrees to be held responsible for the remaining loan balance and make the regular payments. This financial arrangement can […]


Assumption of Mortgage is a VA benefits term that refers to the process in which a buyer takes over the existing mortgage of a property from the current homeowner. By assuming the mortgage, the buyer agrees to be held responsible for the remaining loan balance and make the regular payments. This financial arrangement can benefit both parties, as it allows the seller to relieve themselves of the mortgage obligation and provides the buyer with a loan that may have better terms than a new one.

Key Takeaways

  1. The Assumption of a Mortgage refers to a process where a qualified individual takes over the responsibility of repaying an existing mortgage loan from the original borrower.
  2. For VA loans, when a mortgage loan is assumed, the VA benefit previously used by the seller is restored, enabling them to apply for a new VA loan in the future. The individual taking over the mortgage must meet the VA’s eligibility requirements.
  3. VA loan assumptions have certain advantages such as potentially lower interest rates, no or reduced closing costs, and avoidance of the VA funding fee compared to obtaining a new VA loan.


The term “Assumption of Mortgage” in the context of VA benefits is important because it provides a valuable option for eligible veterans when it comes to home financing.

This concept allows a qualified individual, such as a new buyer, to assume the existing mortgage loan of a VA-eligible seller, including taking over the responsibility for repaying that loan.

Essentially, the new buyer continues the payments on the existing loan as if they originated the loan themselves.

This can benefit both the buyer and the seller; the buyer may enjoy a lower interest rate or reduced financing costs, while the seller can navigate through the process of selling their property with less complication.

By understanding the significance of Assumption of Mortgage, veterans can take advantage of the flexibility that VA loans offer in comparison to other mortgage options, which can ultimately save them time and money when financing their homes.


The purpose of Assumption of Mortgage in the realm of VA benefits is to facilitate the transfer of a loan from a seller to a buyer, while retaining the original loan terms and conditions. This process essentially enables the buyer to take over, or assume, the seller’s mortgage and continue paying the remaining debt under the same interest rate and loan payoff period.

In many cases, it allows the buyer to avoid the process of acquiring a new loan, as well as the associated closing costs, which can be costly and time-consuming. Particularly in situations where the interest rates on the market are higher than the existing loan rate, an assumption of mortgage can be an attractive option for the buyer, since they are benefiting from the more favorable original loan terms.

Assumption of Mortgage is frequently used with VA loans, as the VA permits qualified borrowers to assume other veterans’ home loans. For the seller, the ability to transfer their loan to another party can be advantageous when they are looking to sell their home, as the favorable loan terms can be an attractive selling point.

Moreover, after receiving official approval for the assumption from the VA, the seller’s liability for the loan is removed, allowing them to apply for new VA loans in the future. Overall, the Assumption of Mortgage is a valuable tool for both buyers and sellers, offering flexible loan options that can lead to more favorable terms and open new opportunities in the world of real estate and homeownership.

Examples of Assumption of Mortgage

Veteran Homebuyer: John, a U.S. military veteran, purchases a home using a VA loan. After a few years, he receives orders for a permanent change of station (PCS) and needs to move to a new location. John finds another veteran, Sarah, who is interested in buying his home. With the lender’s approval, Sarah assumes John’s mortgage, taking over the responsibility for the loan payments and benefiting from the VA loan guarantee. This allows John to sell his house and transfer the mortgage responsibility to Sarah, while freeing up his VA loan eligibility to purchase a home in his new location.

Non-Veteran Buyer: Melissa, a non-veteran, is interested in purchasing a home from Mark, a U.S. military veteran who obtained a VA loan. After discussing the details with the lender, it is determined that the loan is assumable and the lender is willing to allow Melissa to assume the mortgage. Melissa will need to meet the lender’s credit and income requirements and agree to the terms of the mortgage. By assuming the mortgage, Melissa can take advantage of the lower interest rate and may avoid some of the closing costs associated with obtaining a new mortgage, while Mark can sell his home and move to a new location.

Divorce Settlement: Jack and Jane, both U.S. military veterans, purchased a home together using a VA loan. Unfortunately, their marriage ends in divorce, and they agree that Jane will keep the home. In order to remove Jack’s responsibility for the mortgage, they reach an agreement for Jane to assume the mortgage loan, including the responsibility for the remaining payments and the VA loan guarantee. To do this, they work with their lender to ensure Jane meets their credit and income requirements, agreeing to the terms and conditions of the loan. This allows Jane to remain in the home and frees up Jack’s VA loan eligibility for future use.

FAQ – VA Benefits: Assumption of Mortgage

What is the Assumption of Mortgage in VA benefits?

The Assumption of Mortgage in VA benefits refers to the process where a homebuyer takes over (assumes) the existing mortgage of the property seller, instead of applying for a new mortgage. This means the homebuyer will become responsible for the monthly mortgage payments, interest, and any remaining principal balance on the loan.

Can all VA loans be assumed?

Yes, in general, all VA loans can be assumed. However, for loans issued after March 1, 1988, the loan must receive official approval from the VA or the loan servicer. Approval depends on whether or not the new borrower can meet the original borrower’s eligibility requirements.

How does the assumption process work?

To begin the assumption process, the new homebuyer who is taking over the mortgage must first complete a VA loan assumption application. This includes providing personal, credit, and financial information, as well as any required documents. The VA and the loan servicer will then review the application, and if approved, the new homeowner will become liable for the mortgage payments. Depending on the state, additional closing costs and fees may be required.

What happens to the original borrower’s eligibility?

When a VA loan is assumed, the seller (original borrower) may not immediately restore their full VA loan entitlement. Their entitlement is tied up in the mortgage until the new borrower successfully pays off the loan or refinances it into a non-VA loan. However, the original borrower may still have partial eligibility remaining, which they can use to obtain another VA home loan in the future.

What are the benefits of an Assumption of Mortgage?

An Assumption of Mortgage offers several advantages for both the buyer and the seller, including potentially lower interest rates if the existing mortgage has more favorable terms, reduced closing costs, and a faster closing process. Additionally, it is also beneficial for the seller as it can make their property more attractive to potential buyers.

Related VA Benefit Terms

  • Loan Guaranty
  • VA Home Loan
  • VA Mortgage Assumption
  • Homeowner Responsibility Transfer
  • Assumable Mortgage

Sources for More Information

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