Many people don’t know what VA loans are, or even that they exist. VA loans are a type of mortgage loan that is guaranteed by the United States Department of Veterans Affairs. This guarantees that the lender will be reimbursed for any losses if the borrower defaults on the loan. Because of this guarantee, VA loans typically have lower interest rates than other types of loans.
Many who have heard of this type of loan wonder, is a VA loan assumable? Read on to find out both what a VA loan is, and whether or not it is assumable.
What Is a VA Loan and Who Is Eligible For It?
A VA loan is a mortgage loan that is backed by the U.S. Department of Veterans Affairs (VA). These loans are available to veterans, active duty service members, and their spouses.
To be eligible for a VA loan, you must be a veteran or an active duty service member. You must also meet the VA’s credit and income requirements. The VA has a loan limit of $453,100, which is the maximum amount you can borrow without making a down payment.
How Do VA Loans Work, and What Are the Benefits of Using Them to Buy a Home?
VA loans offer several benefits, including no down payment, no monthly mortgage insurance, and lower interest rates.
Another advantage is that mortgage closing costs are significantly lower. The VA loan program restricts closing charges to 1% of the loan amount. VA loan lenders are not permitted to charge a variety of extra costs when processing your application, so veterans may save money.
Are VA Loans Assumable, and What Are the Process and Requirements for Doing So?
VA loans are assumable, which means you can transfer your loan to another borrower. The process and requirements for doing so vary depending on the type of loan you have.
If you have a fixed-rate loan, the new borrower will assume your interest rate and monthly payments. If you have an adjustable-rate loan, the new borrower will assume your interest rate and monthly payments, but they may be subject to change.
To assume a VA loan, the new borrower must meet the VA’s credit and income requirements. They will also need to provide proof of their military service. The process for assuming a VA loan can be completed in as little as 30 days.
If You’re Interested in Assuming a VA Loan, What Should You Do First to Get Started on the Process?
If you’re interested in assuming a VA loan, the best thing to do is contact the lender who currently holds your loan. The lender will be able to tell you if the loan is assumable and provide you with the necessary information and requirements for doing so.
Steps of Assuming a VA Loan:
- The first step is to contact the lender who currently holds your loan in order to find out if it is assumable.
- If the loan is assumable, the next step is to have the new borrower meet the VA’s credit and income requirements.
- The new borrower will also need to provide proof of their military service.
- Once these steps are completed, the process for assuming a VA loan can be completed in as little as 30 days.
What Is the Minimum Credit Score Needed For a VA Loan?
The VA does not have a minimum credit score requirement, but most lenders require a score of at least 580. However, the VA will still approve a loan if the new borrower’s credit score is below 580, but they may need to provide a higher down payment.