VA home loans are a great benefit offered to military members and veterans who want to buy their own homes. The VA loan program is known for its low interest rates, no down payment required, and lenient credit requirements. But what happens if you want to transfer your VA home loan to someone else? Can you do that?
What is a VA home loan?
A VA home loan is a mortgage loan that is guaranteed by the U.S. Department of Veterans Affairs. The VA doesn’t make the loan itself; instead, it provides a guarantee to the lender that if the borrower defaults on the loan, the VA will pay the lender a portion of the loan amount.
VA home loans are available to military members, veterans, and eligible surviving spouses. The VA loan program was created in 1944 as part of the Servicemen’s Readjustment Act, also known as the GI Bill of Rights.
Can you transfer a VA home loan to another person?
No, you cannot transfer a VA home loan to another person. The loan is tied to the veteran or military member who originally obtained the loan. If the veteran or military member wants to sell the property, the loan can be paid off and released.
The new buyer can apply for a new VA loan, but they will have to meet the eligibility requirements and go through the loan approval process.
What are the eligibility requirements for a VA home loan?
To be eligible for a VA home loan, you must meet one of the following criteria:
- You are a current or former member of the military
- You have served at least 90 consecutive days of active duty during wartime
- You have served at least 181 consecutive days of active duty during peacetime
- You have served for at least six years in the National Guard or Reserves
- You are a surviving spouse of a military member who died in service or as a result of a service-related disability
In addition to meeting one of the above criteria, you must also have a good credit score, sufficient income to support the mortgage payments, and a valid Certificate of Eligibility (COE) from the VA.
What happens if the borrower dies?
If the borrower dies, the VA home loan does not automatically transfer to another person. The loan must be paid off or assumed by another eligible borrower.
If the borrower has a surviving spouse, the spouse may be eligible to assume the loan and keep the property. The spouse must meet the eligibility requirements and go through the loan approval process.
If there is no surviving spouse or the surviving spouse is not eligible to assume the loan, the loan must be paid off through the sale of the property or other means.
What if you want to add someone to the title of the property?
If you want to add someone to the title of the property, you can do so without affecting the VA home loan. Adding someone to the title does not transfer the loan to that person.
However, if the person you want to add to the title also wants to be added to the mortgage loan, they will have to go through the loan approval process and meet the eligibility requirements.
What are the benefits of a VA home loan?
VA home loans offer many benefits to military members and veterans, including:
- No down payment required
- Low interest rates
- No private mortgage insurance (PMI) required
- Lenient credit requirements
- Ability to finance up to 100% of the home’s value
- No prepayment penalty
VA home loans are also assumable, which means that if you sell the property, the buyer may be able to assume the loan and take advantage of the low interest rate.
Conclusion
In summary, a VA home loan cannot be transferred to another person. The loan is tied to the veteran or military member who originally obtained the loan. If the borrower wants to sell the property, the loan can be paid off and released. The new buyer can apply for a new VA loan, but they will have to meet the eligibility requirements and go through the loan approval process.
If the borrower dies, the loan must be paid off or assumed by another eligible borrower. Adding someone to the title of the property does not transfer the loan to that person.
Despite these limitations, VA home loans offer many benefits to military members and veterans, including no down payment required, low interest rates, and lenient credit requirements. If you are eligible for a VA home loan, it can be a great way to achieve your dream of homeownership.