The VA loan program has long been one of the most meaningful benefits our country extends to veterans. Since the passage of the G.I. Bill in 1944, millions of veterans have achieved homeownership through VA-guaranteed loans.
What many don’t realize is that VA loans are assumable, even by non-veterans. In today’s high-rate, low-inventory market, that detail is gaining new attention.
Why Assumptions Matter Now
Assumptions allow a qualified buyer to take over the seller’s existing VA loan, including its lower interest rate. For buyers, this can mean significant monthly savings compared to current market rates. For lenders and servicers, it creates an avenue to generate activity in a slow market while helping borrowers access affordable housing options.
While VA assumptions have traditionally made up only a small share of loan activity, affordability pressures could make them a more meaningful lever in the coming years.
Compliance Considerations
The opportunity comes with added compliance complexity. Servicers must process assumption applications when requested, and borrowers must receive required disclosures that standard mortgage systems don’t always accommodate.
Recent VA guidance has introduced new documentation requirements, such as seller acknowledgments regarding potential impacts on their VA entitlement. These updates increase the need for lenders to have technology in place that supports compliant processing of assumptions.
How Mortgage Cadence is Responding
To help lenders navigate this emerging opportunity, Mortgage Cadence has built VA loan assumption functionality directly into the Mortgage Cadence Platform (MCP). This solution:
- Automates necessary forms and calculations.
- Supports compliance with the latest VA requirements.
- Reduces reliance on manual workarounds or costly third-party add-ons.
Currently being piloted with select clients, this functionality ensures lenders can process VA assumptions efficiently, compliantly, and cost-effectively.
Balancing Opportunity with Practicality
While assumptions won’t replace traditional volume drivers, they can provide value in today’s environment. The challenge for lenders is balancing operational cost with borrower benefit, as fees on assumptions are restricted and margins can be slim.
By embedding this capability within their LOS, lenders can serve more borrowers without adding significant overhead.
As affordability challenges persist, lenders who can support assumable VA loans may open new doors for borrowers, while capturing incremental volume that others miss.
To learn more about how Mortgage Cadence can help you process VA loan assumptions efficiently, connect with us today.
By Melissa Kozicki, CMB, CMCP, CAMS, Director of Compliance at Mortgage Cadence
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