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VA & military · Assumptions
Can You Assume a VA Loan? How VA Assumptions Work in California
Yes. Veterans and non-veterans can both assume a VA loan if the loan servicer approves them under VA credit and income standards. The buyer pays a VA funding fee of 0.5% of the loan balance (unless exempt) and must cover the seller’s equity with cash or separate financing. The seller’s VA entitlement is only restored if an eligible veteran buyer substitutes their own entitlement.
Why assumptions are getting attention
A buyer who assumes a VA loan takes over the seller’s existing interest rate, balance and remaining term. When today’s rates are higher than the rate on the seller’s loan, that can mean a noticeably lower payment. The catch is the equity gap: the buyer has to pay the difference between the price and the loan balance.
Who can assume a VA loan
- Veteran buyers with enough entitlement, who can also substitute their entitlement so the seller gets theirs back.
- Non-veteran buyers, who can assume through a release of liability, but whose assumption leaves the seller’s entitlement tied to the loan until it is paid off.
In both cases the servicer underwrites the buyer’s credit and income using the same VA underwriting standards used for a new VA purchase loan. The application is VA Form 26-6381.
Costs and timelines at a glance
| Item | What VA rules say |
|---|---|
| VA funding fee | 0.5% of the loan balance, unless the buyer is exempt |
| Processing fee | Capped by federal regulation; ask the servicer for its exact fee |
| Servicer decision | Within 45 calendar days of receiving the application (servicers with automatic authority) |
| Submission to VA | Within 35 calendar days of a complete application (servicers without automatic authority) |
| Buyer appeal | 30 calendar days to request; VA decides within 10 business days of a complete package |
| Seller acknowledgement | VA Form 26-10291, Assumption Entitlement Acknowledgement, signed by the seller no later than closing |
Those are regulatory deadlines, not a promise of how fast a real assumption closes. Build extra time into the contract and confirm the servicer’s process up front.
What happens to the seller’s entitlement
This is the part sellers most need to understand. A release of liability frees the seller from personal liability for the loan. It does not restore their VA entitlement. Entitlement comes back only through substitution of entitlement, which requires a buyer who is an eligible veteran with enough entitlement, who will live in the home and who qualifies. VA requires substitution to be done together with a release of liability.
For veteran sellers
If you plan to buy your next home with a VA loan, find out before you accept an assumption offer whether your remaining entitlement covers the purchase you have in mind. Your lender can run that for you.
Paying the seller’s equity
VA does not offer a second loan for the equity gap. A buyer can pay it in cash, or use secondary financing from another lender, which VA generally allows. The second loan’s payment counts in the buyer’s debt ratios, the money can only go toward allowable costs or amounts owed the seller, and the buyer cannot take cash back.
How to approach an assumption in Nevada County
- Ask the seller’s servicer, in writing, how it handles VA assumptions and how long they are taking.
- Get the exact loan balance and rate so the equity gap is clear before writing an offer.
- Line up the down payment or second-loan financing early.
- Write a contract timeline that allows for servicer approval, with clear contingencies for both sides.
Frequently asked questions
Can a non-veteran assume a VA loan?
Yes. A non-veteran can assume a VA loan if the servicer approves them under VA credit standards, but the seller’s VA entitlement stays tied to the loan until it is paid off.
What is the VA funding fee on an assumption?
0.5% of the loan balance, paid to VA, unless the buyer is exempt from the funding fee.
Does a release of liability restore the seller’s VA entitlement?
No. Entitlement is restored only when an eligible veteran buyer substitutes their own entitlement, which VA requires to happen together with a release of liability.
Can the buyer finance the seller’s equity?
VA does not offer a second loan, but secondary financing from another lender is generally allowed if it meets VA’s conditions and the payment is counted in the buyer’s debts.
Sources
- VA Circular 26-23-10: Assumption requirements
- VA Circular 26-24-9: Assumption Entitlement Acknowledgement
- VA Circular 26-24-17: Secondary financing on assumptions
- 38 CFR 36.4313: Charges and fees
- 38 CFR 36.4303: Reporting requirements (assumptions)
- VA.gov: VA funding fee and closing costs
Information current as of September 16, 2026. General information only, not legal, tax or lending advice.
