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VA loans · 38 U.S.C. 3714Assuming a VA loan: how the seller gets released and what the buyer pays

A VA-guaranteed loan with a commitment made on or after March 1, 1988 can be assumed with approval (38 U.S.C. 3714). If the seller notifies the loan holder in writing before selling, the holder must approve the assumption – and the seller is relieved of all further liability to VA on the loan – when the loan is current and the buyer is contractually obligated to buy and assume full liability for the remaining balance and qualifies from a credit standpoint as if they were an eligible veteran. The buyer doesn't have to be a veteran. The holder (or its servicer with automatic authority) reviews the buyer's creditworthiness and should advise the seller within 45 days of receiving a complete application, extendable for documented delays beyond its control. If it says no, the seller can appeal to VA within 30 days; VA can, in limited hardship cases, still direct approval with the seller remaining secondarily liable. If the seller transfers the home without notifying the holder first, the holder may demand full payment. The buyer pays VA a funding fee of one-half of one percent of the loan balance, and the holder may charge a reasonable processing fee capped by regulation (38 CFR 36.4313(d)(8), which refers to $300 and the actual cost of any credit report, or a state-law maximum), with $50 refunds if the application isn't approved automatically and again if VA doesn't approve it. Release of liability isn't the same as getting entitlement back: the seller's entitlement is restored early only if the buyer is an eligible veteran who agrees to substitute their own entitlement.

When the assumption must be approved (§3714(a))

  1. 1. Written notice first

    The seller notifies the holder in writing before selling.

  2. 2. Loan current

    No past-due payments.

  3. 3. Buyer assumes

    Contractually obligated to buy and assume full liability for the balance.

  4. 4. Buyer qualifies

    Creditworthy as if an eligible veteran – the buyer needn't be a veteran.

Fees and timing

  1. Funding fee

    0.5% of the loan balance, paid by the buyer (38 CFR 36.4313(e)(2)).

  2. Processing fee

    Reasonable, capped by 38 CFR 36.4313(d)(8); $50 refunds if not approved.

  3. Decision

    Within 45 days of a complete application; 30 days to appeal a denial to VA.

  4. No notice

    Selling without notifying the holder lets it demand full payment.

Release vs entitlement

  • Release of liability frees the seller from the debt – it doesn't restore the seller's VA entitlement.
  • Entitlement comes back early only if a veteran buyer substitutes their own entitlement (38 U.S.C. 3702(b)(2)).

What the TC can do

  • Have the seller send the holder written notice before anything is signed to close.
  • Order the servicer's assumption package and count the 45 days from a complete application.
  • Ask whether the buyer is a veteran willing to substitute entitlement – it matters to the seller.

Questions buyers and sellers ask

Can a non-veteran assume a VA loan?

Yes. The buyer must qualify from a credit standpoint as if they were an eligible veteran, but doesn't have to be one (38 U.S.C. 3714).

What does it cost to assume a VA loan?

A VA funding fee of 0.5% of the loan balance, plus a processing fee capped by 38 CFR 36.4313(d)(8).

Does the seller get their VA entitlement back after an assumption?

Not automatically. A release of liability ends the seller's liability; entitlement is restored early only if a veteran buyer substitutes their own entitlement.

How long does a VA assumption take?

The holder should decide within 45 days of receiving a complete application package, with extensions only for documented delays beyond its control.

Related guides

Add the holder's assumption approval and release of liability as documents on the deal in ClosingCode, with the 45-day decision date as a task.

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Sources: 38 U.S.C. 3714 and 3702(b)(2) (U.S. Code 2023 edition, govinfo.gov); 38 CFR 36.4303(l) and 36.4313(d)(8), (e)(2) (eCFR) – read October 26, 2026.

General information, not legal or financial advice. The loan holder and VA decide. ClosingCode is software; it is not a lender or law firm. This guide is not a substitute for the advice or services of an attorney.