Does the seller have to pay for any of the buyer's closing costs on a VA transaction?

No: The seller is not required to pay any additional closing costs on a VA loan.

Is a termite inspection always required on a VA loan?

Yes: A termite inspection will be required and is typically paid by the seller, but it can be paid by the VA buyer. If any infestation is found, it must be cured. Merchants can sometimes close without termite clearance in hand - contact us for details.

Does the VA loan take longer than conventional to close?

No: A VA loan can close in 2 weeks in most locales with Merchants Home Lending.

Are VA appraisers tougher than conventional on the property?

No: VA appraisers use the same process as conventional but have more latitude in their assessments since only VA underwriters review their work (not appraisal management companies).

Can a VA buyer waive contingencies on their offer?

Yes: VA buyers can waive both loan and appraisal contingencies, though the VA Amendatory Clause still provides protection against low appraisals.

Can a Non-VA buyer assume a VA loan?

Yes, but the seller's VA benefit remains tied up until the loan is paid off. We generally don't recommend this unless the seller won't need their VA benefit again.

Should I accept a VA offer?

Yes, with zero hesitation. VA loans offer the most predictable outcomes of all loan types.

VA Loan Assumptions FAQs

1. What is a VA loan assumption?

A VA loan assumption allows a qualified buyer to take over an existing VA mortgage, including its interest rate, remaining balance, and loan terms, instead of obtaining a brand new mortgage.

2. How does a VA loan assumption work?

The buyer applies to assume the seller’s VA loan, meets lender requirements, and receives approval. Once completed, the buyer becomes responsible for payments under the original loan terms.

3. Are VA loans assumable by default?

Yes, VA loans are generally assumable. However, the assumption must be approved by the lender and meet VA guidelines to ensure the buyer can repay the loan.

4. Can anyone assume a VA loan?

Not everyone qualifies automatically. Buyers must meet credit, income, and financial standards set by the lender, regardless of military status.

5. What are the benefits of assuming a VA loan?

Key benefits include keeping a lower existing interest rate, reduced closing costs, and avoiding market rate increases, which can significantly improve affordability for buyers.

6. Who can assume a VA loan — veterans vs non-veterans?

Both veterans and non-veterans can assume a VA loan. However, entitlement treatment differs depending on whether the buyer is eligible for VA benefits.

7. What credit score or financial requirements are needed to assume a VA loan?

Lenders typically require acceptable credit history, stable income, and reasonable debt levels. Exact requirements vary by lender and loan size.

8. Does the buyer need to be a veteran to assume a VA loan?

No, veteran status is not required. Non-veteran buyers may assume a VA loan, though this can affect the original borrower’s VA entitlement in California.

9. Can a VA loan be assumed if the property will not be the buyer’s primary residence?

Generally, VA loan assumptions require the buyer to occupy the home as a primary residence. Investment or rental use is typically not permitted under VA rules.

10. What happens to the original veteran’s VA entitlement when a non-veteran assumes the loan?

If a non-veteran assumes the loan, the original veteran’s entitlement usually remains tied to that mortgage until it is fully paid off.

11. How long does a VA loan assumption take?

VA loan assumptions often take 30 to 60 days. Timelines depend on lender processing speed, documentation accuracy, and borrower financial review.

12. What steps are involved in getting a VA loan assumption approved?

The process includes buyer application, credit and income review, lender underwriting, VA compliance checks, and final approval, which may vary by lender and California market practices.

13. Do lenders require an appraisal for a VA loan assumption?

In many cases, a new appraisal is not required. However, some lenders may request one depending on risk factors or secondary financing needs.

14. Can the interest rate change during an assumption process?

No, the interest rate does not change. One major advantage of a VA loan assumption is that the buyer keeps the original loan’s interest rate.

15. Who must approve a VA loan assumption — lender, VA, or both?

The lender must approve the assumption, and the VA must recognize it for entitlement purposes. Both play roles in ensuring compliance and borrower eligibility in California.

16. Is there a VA loan assumption fee, and how much is it?

Yes, the VA allows a modest assumption processing fee. Lenders may also charge administrative fees, but overall costs are typically lower than new loan closings.

17. Do VA loan assumptions require a down payment?

A down payment is not required by VA rules. However, buyers may need cash to cover any difference between the sale price and remaining loan balance.

18. What costs are typically involved with a VA loan assumption?

Common costs include the VA assumption fee, lender processing charges, title services, and potential escrow or recording fees, depending on transaction structure.

19. What happens if the home’s sale price is higher than the remaining loan balance?

The buyer must pay the difference in cash or secure secondary financing. This is a common scenario in rising markets like California.

20. Can a VA loan assumption affect the borrower’s ability to qualify for secondary financing?

Yes, secondary financing depends on credit strength, income, and lender rules. In California, lenders carefully assess combined debt to ensure affordability and compliance.