If you're a veteran sitting on a 6.5% VA loan right now, you've probably gotten at least three mailers about the VA IRRRL, the Interest Rate Reduction Refinance Loan. Rates have dropped, lenders are marketing hard, and the promise is a lower monthly payment with minimal paperwork.
But there's a second option that almost nobody talks about: a VA loan assumption. Instead of refinancing your current mortgage into a new one, you sell your home and let the buyer take over your existing loan, or you buy a home by assuming the seller's lower rate.
These two tools solve different problems. Here's how to figure out which one applies to your situation.
What Is a VA IRRRL?
The IRRRL (pronounced "Earl" in the mortgage industry) lets you refinance an existing VA loan into a new VA loan at a lower rate. The rules are straightforward:
- You must already have a VA loan
- The new rate must be lower than the current rate (with one exception for switching ARM to fixed)
- You can roll closing costs into the loan
- No appraisal or income verification required in most cases
The VA funding fee on an IRRRL is 0.5% of the loan amount. On a $400,000 loan, that's $2,000. You can roll it in, but you're still paying it.
Typical IRRRL costs: On a $400,000 loan, expect $2,000 to $6,000 total in closing costs depending on the lender. Some lenders advertise "no-cost IRRRLs" but recover the costs through a slightly higher rate.
What Is a VA Loan Assumption?
A VA loan assumption lets a buyer take over an existing VA loan, keeping the original rate, balance, and terms. The buyer qualifies directly with the lender, and the seller is released from liability.
Key facts:
- The loan must be current (no missed payments)
- The buyer qualifies based on their credit and income, lender underwrites them
- Non-veterans can assume VA loans (this surprises most people)
- The original seller's VA entitlement stays tied up until the buyer refinances or sells, unless the buyer is also a veteran and substitutes their entitlement
Assumption costs: Typically $500 to $1,000 in processing fees, plus standard title and closing costs. No VA funding fee on assumptions.
The Real Math: IRRRL vs. Assumption
Let's run two realistic scenarios for 2026.
Scenario 1: You Own a Home, Want a Lower Rate
You have a $380,000 VA loan at 6.5%. Current IRRRL rates are running around 5.375% with no points at reputable lenders (not Veterans United, which charges a 1.5% origination fee on top).
IRRRL at 5.375%:
- Monthly payment at 6.5%: $2,402
- Monthly payment at 5.375%: $2,131
- Monthly savings: $271
- Closing costs: roughly $3,800 (0.5% funding fee + origination + title)
- Break-even: 14 months
That's a solid refinance if you plan to stay in the home for at least two years.
What if you could assume instead? If you're the buyer, not the seller, and you find a home with a 2.75% VA loan and a $300,000 balance, your payment on that balance is $1,224 per month. A new loan at 5.375% on the same balance runs $1,685. That's $461 per month saved, every month, for the life of the loan. Over 30 years, that's $166,000 in savings before accounting for the time value of money.
The assumption doesn't help you refinance your current home, but it fundamentally changes what you can afford when you buy your next one.
Scenario 2: You're Selling and Want to Maximize Your Sale Price
You have a 2.25% VA loan with a $290,000 balance. Market rate is 6.5%. Your home is worth $420,000.
If you sell conventionally, a buyer takes a new loan at 6.5%. Their payment on $420,000 (with 5% down) is $2,531 per month.
If you market as assumable, a buyer can take over your $290,000 loan at 2.25%. Their payment on that balance: $1,110 per month. They'll need to cover the $130,000 equity gap (your equity) with cash, a second mortgage, or a combination, but their total housing cost is dramatically lower even after accounting for a second loan.
This means your assumable rate is a marketing asset. Listing agents who understand this can price the home $20,000 to $40,000 higher and still close faster because the buyer's effective monthly cost is lower than any competing property with conventional financing.
IRRRL: When It Makes Sense
Do the IRRRL if:
- Your current VA rate is above 6% and you plan to stay at least 18 months
- You don't have a near-term move coming (PCS, job change, family needs)
- You can find a lender with no or low origination fees, the difference between lenders is massive right now
- You want simplicity: no appraisal, no income verification in most cases
Rate shopping for IRRRL: Don't go with the first mailer you get. Veterans United, Rocket, and the big names typically charge 1% to 1.5% origination on top of the VA funding fee. Local credit unions and independent mortgage brokers regularly beat them by 0.25% to 0.5% on rate. Get at least three quotes. Penn Fed, Navy Federal, and regional brokers are frequently the best deals.
Loan Assumption: When It Makes Sense
Consider an assumption if:
- You're buying a home and the seller has a sub-4% VA or FHA loan
- You're selling and want to use your rate as a competitive differentiator
- You're going through a divorce and want to keep the home at the existing rate rather than refinancing
- You're a non-veteran buyer who wants to access rates that are no longer available through normal origination
The divorce use case is underappreciated. If you and a spouse bought a home in 2020 or 2021 at 2.5% to 3.5%, a loan assumption lets one spouse keep the home and the existing rate. The departing spouse gets removed from the loan. The lender will require full income and credit qualification from the remaining borrower, but no new rate applies, you keep the original terms.
The Hidden Variable: VA Entitlement
One consideration unique to VA loans: when a non-veteran assumes your VA loan, your VA entitlement stays tied to that property until the loan is paid off or the buyer refinances. This limits your ability to use a VA loan on a new purchase without paying a higher funding fee or using remaining entitlement.
If the buyer is a qualified veteran and substitutes their entitlement, you get yours back immediately. This is worth asking about during assumption negotiations, it can affect your next purchase significantly.
Bottom Line
The IRRRL is a refinancing tool. The VA loan assumption is a buying and selling tool. They're not competing strategies, they serve different moments in your real estate journey.
If you're in a 6%-plus VA loan and staying put: shop IRRRL rates aggressively, avoid lenders with high origination fees, and break even is usually under 18 months.
If you're buying your next home or selling your current one: ask about assumable inventory. A seller with a 2.5% loan has an asset most buyers don't know to ask for, and most agents don't know how to price. Finding one, or being one, changes the math on every offer.
The veterans who win in the current market are the ones who know both tools exist and know when to use each.
Questions about VA loan assumptions or finding assumable homes in your market? Contact The Assumable Guy, we specialize in helping veterans and buyers navigate the assumption process from offer to close.
Ready to Find an Assumable Mortgage in Colorado?
Browse available listings or schedule a free call with Ryan Thomson, Colorado's leading assumable mortgage specialist.
Browse Homes | Schedule a Call | (719) 624-3472
Frequently Asked Questions
Can non-veterans assume VA loans?
Yes. Non-veterans can assume VA loans. You don't need military service. You need to qualify financially (credit, income, DTI) with the loan servicer. The seller's VA entitlement stays tied to the loan if a non-veteran assumes it.
What happens to the seller's VA entitlement when their loan is assumed?
If a non-veteran assumes the loan, the seller's entitlement stays tied to the property until the loan is paid off. If a veteran assumes and substitutes their own entitlement, the seller's entitlement is released for future use.
What credit score is needed to assume a VA loan?
Most servicers require 620+ for VA assumptions. The VA itself doesn't set a minimum, but lenders do. Your DTI should generally be under 41%.
How long does a VA loan assumption take?
VA assumptions typically take 45-90 days. Servicers familiar with VA loans (USAA, Navy Federal, Veterans United) tend to process faster. Smaller banks can be slower.
What are the fees for assuming a VA loan?
VA assumption fees are minimal: typically a $300-$500 assumption processing fee plus standard closing costs (title, recording, prepaid items). No VA funding fee applies to assumptions.
Do I need a Certificate of Eligibility to assume a VA loan?
No. Non-veterans don't need a COE to assume a VA loan. Veterans assuming the loan may want to substitute their entitlement to release the seller's, which requires their own COE.