“Selling a Home with an Assumable VA Loan in Central Florida: Key Rules & Risks”

1. Can a VA loan be assumed?

Yes, most VA loans are assumable, but VA + lender approval is required.

The buyer must:

• Qualify with the lender (credit, income, DTI)

• Agree to assume the existing interest rate, balance, and terms

• Pay any required equity (cash or secondary financing)

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2. Who can assume a VA loan?

A VA loan can be assumed by:

• ✅ Another eligible veteran

• ✅ A non-veteran (civilian)

⚠️ This distinction is critical for the seller’s future VA eligibility.

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3. Seller Release of Liability (VERY IMPORTANT)

A Release of Liability protects the seller if the buyer later defaults.

To get a release:

• The buyer must qualify

• The lender and VA must approve

• It must be formally documented (not automatic)

❗ Without a release, the seller remains legally responsible for the loan—even after the home is sold.

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4. What happens to the seller’s VA entitlement?

Scenario A: Veteran assumes the loan AND substitutes entitlement

✅ Best-case scenario

• Buyer uses their own VA entitlement

• Seller’s entitlement is fully restored

• Seller can immediately use a new VA loan with full benefits

👉 This is the only way to restore entitlement without paying off the loan.

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Scenario B: Non-veteran assumes the loan

⚠️ Most common — and risky for the seller

• Seller’s VA entitlement remains tied to the loan

• Seller cannot reuse that portion of entitlement

• Seller may still buy again only if they have remaining entitlement

👉 Many sellers don’t realize this until they try to buy their next home.

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Scenario C: Veteran assumes but does NOT substitute entitlement

⚠️ Still problematic

• Seller’s entitlement stays tied up

• Seller may be limited or blocked from using VA again

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5. Can the seller buy another home with a VA loan?

YES — if:

• Entitlement is fully restored, OR

• Seller has remaining entitlement (partial entitlement scenario)

NO — or limited — if:

• Entitlement is tied up in the assumed loan

• Loan amount exceeds remaining entitlement

• County loan limits + entitlement don’t support the new purchase

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6. How does entitlement get fully restored?

A seller gets full restoration only when:

• The VA loan is paid off, OR

• A qualified veteran substitutes entitlement during assumption

📌 Selling to a civilian does not restore entitlement—even with a release of liability.

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7. Fees and timing

• VA funding fee for assumptions: 0.5% of loan balance

• Processing time: 30–60 days (can be longer)

• Assumptions are not fast closings

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8. Key takeaways

• ✔ VA loans are assumable, but not simple

• ✔ Release of liability ≠ entitlement restoration

• ✔ Only veteran-to-veteran substitution restores entitlement

• ✔ Civilian assumptions often block seller’s next VA purchase

• ✔ Always verify entitlement before listing or accepting an offer