VA vs. FHA Loan Assumption – Key Differences for Homeowners

When it comes to assuming a mortgage, VA (Veterans Affairs) and FHA (Federal Housing Administration) loans provide unique benefits. Understanding how each type of loan works can help both buyers and sellers make informed financial decisions. Let's dive into the key differences between these assumable loans.

🏡 Primary Residence Requirement

VA Loans:

  • If the buyer uses their VA entitlement, they must occupy the home within 60 days of settlement.

  • If the buyer assumes the seller’s entitlement, the home does not have to be a primary residence.

🏡 FHA Loans:

  • Buyers must establish the property as their principal residence within 60 days and live there for at least one year.

🎖️ VA vs FHA Loan Entitlement Differences

VA Loans:

  • The VA loan is tied to the veteran’s entitlement.

  • A veteran buyer can substitute their entitlement for the seller’s.

  • Non-veteran buyers can assume the loan, but the seller’s entitlement remains attached to the mortgage.

🏡 FHA Loans:

  • No entitlement eligibility is required.

  • Any buyer with a valid Social Security Number (including resident aliens) can assume an FHA loan if they meet HUD’s financial qualifications.

⏳ Closing Timeframes

VA Loans:

  • Lenders must decide within 45 days of receiving a loan assumption package (VA Circular 26-23-27).

  • Most VA assumptions close within 45-60 days after contract ratification.

🏡 FHA Loans:

  • The process should be completed within 45 days (HUD Handbook 4155.1, Chapter 7).

  • Most FHA assumptions take 60-75 days to close.

💰 Assumption & Processing Fees

VA Loans:

  • VA charges a 0.5% assumption fee on the loan balance.

  • Fee Waivers: Disabled veterans, surviving spouses, and Purple Heart recipients.

  • Additional lender fees can range from $638 to $713, depending on location.

🏡 FHA Loans:

  • As of May 2024, FHA lenders can charge a maximum processing fee of $1,800 for loan assumptions.

🛡️ Mortgage Insurance

VA Loans:

  • No mortgage insurance (MI) required—regardless of down payment or loan amount.

🏡 FHA Loans:

  • Mortgage insurance is required if the loan was issued after June 3, 2013:

    • Can be removed after 11 years if the original down payment was at least 10%.

    • Remains for the life of the loan if the down payment was less than 10%.

    • Annual MI rate: 0.55% of the remaining loan balance.

🏦 Second Mortgage Options

VA Loans:

  • No restrictions on second mortgages, but servicers may impose their own policies.

🏡 FHA Loans:

  • FHA does not restrict second mortgages, but servicers may have their own limitations.

🤔 VA vs FHA Loan Assumption - Which One is Right for You?

If you're considering assuming a mortgage, knowing the key differences between VA and FHA loans will help you make the best financial decision:

VA Loans:

  • No mortgage insurance

  • Lower assumption fees

  • Requires VA entitlement eligibility

🏡 FHA Loans:

  • More flexible eligibility rules

  • Includes mortgage insurance costs

  • May take longer to close

💡 Pro Tip: Always consult with a real estate professional to determine which loan assumption best aligns with your financial goals.

🌟 How to Find Assumable VA & FHA Homes Easily!

Finding assumable mortgages with ultra-low interest rates (2.5%-3%) can be tricky—but there’s an easier way!

🎯 Assume List is a powerful platform built by real estate agents to help:
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📍 Why Assume List is a Game-Changer?

  • Easily search for VA, FHA, and USDA assumable loans.

  • Find affordable mortgage payments without refinancing.

  • Work with top real estate agents who specialize in loan assumptions.

🚀 Check out Assume List here: https://assumelist.com/


📞 Need Expert Help With a Loan Assumption?

If you’re buying or selling a home and want to explore loan assumptions, let’s chat!

📲 Call: 919-725-2837
📧 Email: billburnsrealty@gmail.com

🌎 Website: CarolinaForSale.com

🏡 Make homeownership more affordable with assumable loans!