Are you a veteran or active-duty service member looking to sell your home that was purchased through a VA mortgage program? You may be wondering how this might affect the process of selling.
Long story short, the home-selling process for VA loans is much like any other type of real-estate transaction. However, certain rules and benefits specific to VA loans may impact your decisions.
This blog will answer common questions sellers have when selling a home with a VA loan.
Yes, you can absolutely sell a home purchased with a VA loan. There is no penalty for selling your home early, even if you’ve only lived in it for a short period. Homeowners may choose to sell for many reasons—relocation, change in family size, or financial goals.
One factor to keep in mind is your VA loan entitlement. When you sell, your entitlement can either be restored for future use or remain tied up if the buyer assumes your existing VA loan. Additionally, depending on market conditions, you might explore options such as refinancing before listing your home to improve your financial position or make the property more attractive to potential buyers.
There’s no mandatory waiting period before selling a home purchased with a VA loan. However, the VA does have an occupancy requirement, which typically means you must intend to live in the home as your primary residence. This intent is usually fulfilled if you’ve lived in the home for at least 12 months, although this is not a strict rule.
If you have a legitimate reason—such as military deployment, job relocation, or family needs—you can still sell the home earlier without penalty. Just be prepared to explain your situation, especially if you’re planning to use another VA loan in the future.
When selling a home backed by a VA loan, the seller isn’t bound by special VA regulations that would complicate the transaction. Your responsibilities are mostly in line with those of any home seller. You’ll need to ensure proper disclosures, maintain the property’s condition, and work with your agent to coordinate a smooth closing.
It's important to note that while a VA appraisal is required for VA loan buyers, it's not mandatory if your buyer is using a conventional or FHA loan. However, if your buyer is also a VA loan applicant, the home must meet VA minimum property requirements (MPRs), which could influence your timeline or repair expectations.
Negative loan equity—also called being “underwater”—means you owe more on your mortgage than your home is currently worth. This can happen if property values drop or if you bought the home recently with minimal equity. If you're in this situation and need to sell, here are your main options:
The proceeds from the sale are typically used to pay off the remaining balance on your VA loan. This is handled at closing, just like with any other mortgage payoff. Once the loan is paid in full, your VA mortgage is considered closed.
After the sale, you can apply to the Department of Veterans Affairs to have your entitlement restored. This is an important step if you plan to use a VA loan again for another home purchase. However, if your loan is assumed by the buyer—meaning they take over your loan—your entitlement may remain tied up with that mortgage until it’s fully paid off by the new borrower.
Yes, you can use a VA loan again after selling your home. Once your original VA loan is paid off, you’re eligible to apply for restoration of your full entitlement. This restored entitlement enables you to take out another VA loan, even if it’s for a home in a different location.
In cases where only a portion of your entitlement was used, or if your loan was assumed and not yet paid off, you may still qualify under what’s known as second-tier entitlement. This allows for multiple VA loans under certain conditions—typically when purchasing a new primary residence due to relocation or family changes.
Yes, VA loans are assumable, which means a buyer can take over your loan’s current terms—including interest rate and remaining balance—if they meet the necessary financial and credit qualifications. This feature can be particularly attractive in a high-interest-rate market, especially if your loan has a lower fixed rate.
However, loan assumptions must be approved by your lender and the VA. If you want to restore your VA loan entitlement after an assumption, the new buyer must be a qualified veteran who agrees to substitute their entitlement for yours. If they are not eligible or don’t substitute entitlement, your VA benefit remains tied to the assumed loan until it is fully paid off.
Yes, one of the unique features of a VA loan is that it can be assumed by a qualified buyer—even if they are not a veteran. This means the buyer takes over your loan, including its current balance, interest rate, and terms. This can be highly attractive in a market with rising interest rates, especially if your loan has a lower rate locked in.
However, VA loan assumptions require approval from both the VA and your loan servicer. The buyer must meet credit and income qualifications, and you'll need to release your liability through a formal substitution of entitlement if you want your VA benefits restored. Without this substitution, your entitlement remains tied to the assumed loan until it is fully paid off.
Selling a home with a VA loan comes with its own set of advantages and potential limitations.
Are you interested in selling your home with a VA loan? At Commander Mortgage, it’s our pleasure and our privilege to serve those who have served us. We’re committed to supporting service members, veterans, and their families throughout the entire VA home loan selling and buying process.
Connect with an agent at Commander Mortgage today to learn about your options!
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