Mortgage · Answer
Can I assume our FHA or VA loan?
The short answer
FHA loans are assumable, so the spouse keeping the house may be able to take over the existing loan. The original borrower stays liable unless the lender releases them, so the release matters as much as the assumption. For a VA loan, I don't have a verified rule to give you here; ask your loan servicer directly. In every case, the lender decides.
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FHA loans: assumable, with a catch
HUD treats FHA loans as assumable, which means one of you may be able to keep the existing loan, with its rate and its remaining term, rather than starting a new one. The lender still has to approve the person assuming it. And under HUD's guidance, the original borrower stays personally liable unless the lender releases them from liability.
Assumption without release is a trap. The spouse who leaves can end up still responsible for a loan on a house they no longer own.
Federal law also protects the spouse who stays: a divorce decree that makes the borrower's spouse an owner isn't grounds for the lender to demand full payment, per 12 U.S.C. 1701j-3(d)(7).
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VA loans: ask the servicer
VA loans have their own rules on assumptions and on releasing a borrower, and the answer depends on your loan and the person taking it over. If your loan is a VA loan, call the servicer listed on your monthly statement, ask in writing what an assumption and a release would require in your case, and give that answer to your attorney.
That's especially worth doing if one of you is a service member. The page on military divorce covers the sale side.
Don't rely on secondhand answers.
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Get the release in writing
Whatever the loan type, the lender's written release is the document that matters, not your divorce judgment. A HUD decision has held that a divorce decree doesn't bind the lender, because the loan is a contract between the lender and the borrowers. Ask your attorney to make the deed transfer depend on that release.
If assuming isn't possible, compare a refinance or a sale. Can I refinance before the divorce is final? is a good next read.
Without that release, the spouse who leaves stays on the hook for every payment the other spouse makes or misses, no matter what the judgment says about who keeps the house.
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What to ask the lender
Call the servicer and ask for answers in writing. Ask whether the loan can be assumed, what the person taking over has to show to qualify, whether the lender will release the original borrower, and how long the process takes. Write down who you spoke to. Then compare what you learn with a refinance and with a sale, using the keep or sell tool.
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