Assumable VA Loans: Who Can Take Over One, the 0.5% Fee, and the Entitlement a Seller Can Leave Behind

The VA funding fee to take over someone else's VA loan is 0.5 percent, against 2.15 percent for a first-use purchase loan with less than 5 percent down and 3.3 percent for a later use. Those figures are in the fee table of 38 U.S.C. 3729, row (I), "Loan assumption under section 3714," and on VA's funding fee page. Nothing here is proposed or pending: the assumption rules are settled law in 38 U.S.C. 3714 and VA's regulations at 38 CFR Part 36. What is not fixed is the price of the deal, because the buyer takes on the unpaid balance and must still pay the seller the rest of the price.

Who can take over a VA loan

The buyer does not have to be a veteran. Section 3714(a)(1) approves an assumption when "the loan is current" and the purchaser "qualifies from a credit standpoint, to the same extent as if the purchaser were a veteran." The fee table backs that up with a 0.50 column for "other obligors." The loan papers say the rest: section 3714(d) requires the notice "This loan is not assumable without the approval of the Department of Veterans Affairs or its authorized agent." In practice that agent is the loan holder, the servicer that collects the payment.

The servicer cannot sit on the file. Under 38 CFR 36.4303(l)(1)(i)(C), a holder with automatic authority must finish the credit review "no later than 45 days after the date of receipt by the holder of a complete application package." Its processing charge is capped by 38 CFR 36.4313(d)(8) at a fee "not to exceed the lesser of $300 and the actual cost of any credit report required," or a lower state maximum. If the application is still disapproved after 60 days, the holder "must refund $50" of that fee.

A buyer who receives VA compensation for a service-connected disability pays no funding fee on the assumption either. Section 3729(c) says a fee "may not be collected under this section from a veteran who is receiving compensation."

What a low assumed rate is worth against your BAH

The reason anyone assumes a loan is the rate. The table takes 2026 BAH with dependents at Eglin AFB (military housing area FL056) and asks how large a loan that monthly amount pays off, principal and interest only. One column is a new 30-year loan at 7.24 percent. The other is an assumed loan at an example rate of 3.00 percent with 25 years left on it. Property tax and insurance would come out of the same BAH, so neither column is a budget.

At these two rates the same BAH carries about 44 percent more loan when the loan is assumed. For an E-5 at Eglin that is $156,054.83 of balance the housing allowance can cover that a new loan could not. Your own grade and duty station are in the BAH calculator.

The catch for the buyer: the seller's equity

An assumption transfers the unpaid balance, nothing more. If the house sells for more than that balance, the buyer pays the difference to the seller in cash or with separate financing, and on a loan a few years old the difference is large. The worked example shows it.

The assumption saves $7,177.50 in funding fee and $1,376.86 a month, and costs $115,499.64 up front. Whether that trade works depends on what the buyer has in savings and what the second financing costs. The VA funding fee calculator prices the new-loan side for your own down payment and use.

The catch for the seller: entitlement that stays behind

Sellers rarely ask this until their next PCS. Section 3702(b) restores entitlement in two ways: the property is disposed of and "the loan has been repaid in full," or "a veteran-transferee has agreed to assume the outstanding balance on the loan" and consents to use their own entitlement in its place. VA.gov lists the same two paths, plus a one-time restoration for a paid-off loan on a home you still own. A sale to a non-veteran who assumes meets neither: the loan is not repaid, and there is no entitlement to substitute. The seller's entitlement stays charged until the buyer pays the loan off.

How much is charged is set by section 3703: on a loan over $144,000.00 the guaranty is "25 percent of the loan," so the E-7's $320,000.00 loan ties up $80,000.00. VA's loan-limits page gives the method for what is left: 25 percent of the county's one-unit limit, minus entitlement used, times four for the largest loan with no down payment. In a county at FHFA's 2026 baseline of $832,750.00, that is $208,187.50 minus $80,000.00, or $128,187.50, which supports a zero-down loan of up to $512,750.00 at the next base. A higher-cost county raises that ceiling; a larger original loan lowers it.

Release of liability is a separate question from entitlement. Section 3714(a)(1) relieves the seller "of all further liability to the Secretary" only when the seller notifies the holder in writing before the sale and the assumption is approved. A buyer who takes title without the holder's approval leaves the seller on the hook for the note.

Before you sign, as a buyer or a seller

• Buyer: get the payoff balance and the note rate from the servicer in writing, then price the equity gap before you price the house.
• Seller with a veteran buyer: make substitution of entitlement part of the contract, so your entitlement comes back at closing.
• Seller with a non-veteran buyer: run the remaining-entitlement math for your next duty station first, on the VA loans page.
• Both: the application goes through the servicer, which has 45 days from a complete package; the clock does not start on an incomplete one.

BAH figures are the 2026 rates for Eglin AFB; fees and rules are as published on November 3, 2026. Always verify with your finance office and your loan servicer before making financial decisions. Our VA home loan basics guide covers the loan itself, and the PCS calculator covers the move that usually starts this.