VA and subject to

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  • Hey crew. Any experience with a VA first and buying subject to?

    HI Don

    Do you mean a Veterans Loan as a first or a Virtual Assistant?

    Veterans Administration Loan

    I have bought properties subject-to a VA loan.

    Like FHA loans, you can only have one at a time. So, if you buy subject-to a VA loan, the seller will not be able to get another VA loan until it is paid off. However, some states have special veteran loan programs which are separate from the VA. Texas has the Texas Veterans Loans programs which can be used to buy land or houses or mobile homes in Texas.

    Here’s info on the Illinois VA loan program

    Don, here’s an excerpt you might want to see:

    Excerpt from:

    Getting a “Subject To” Mortgage
    A property that is subject to a mortgage is a different animal. If you are the buyer, you make the loan payments, but the loan remains in the seller’s name, and the deed is transferred into your name. If you default on the payment, you have no personal liability for the mortgage. That problem will fall back on the former owner.

    Why would anyone agree to sell with a subject to stipulation? There are certain loans that require narrowly defined qualifications, such as a veteran guaranteed loan. If you want to buy the house and you are not a veteran, you cannot qualify for that loan, however, if the loan stays in the seller’s name and you simply make the payments you are good to go. Unlike with assumable loans, the lender is not involved in a subject to transaction. The risk to the seller is significant because if you default, he is financially responsible and it is his credit that takes the hit. For this reason, a seller should always check out the buyer’s credentials carefully prior to accepting an offer that includes taking the property subject to the seller’s mortgage.

    As the seller, you will be required to show your most recent payment record which will include the principal balance. If the lender finds out about this deal, the lender might demand you pay the loan off in full depending on the laws in the state where the property is located.


    1, So the seller needs some assurance that you are very unlikely to default — since it’s his or her credit that would take a whack.

    2. Apparently some states (the article didn’t list which ones) facilitate a “due on sale” clause (whether de facto or explicit) that could allow the lender to demand full payoff upfront — not a good outcome!! You’d want to check the relevant state to find out. I had no idea this was possible with a VA loan — unless the article author is incorrect.


    Thanks Jackie, Dee,
    I have done subject to in the past but never with a VA underlying. Thanks guys

    Hey Don

    They are great to work with. The VA will most time try to help the home owner (Vet). Well in the cases we have done. I have been told that as long as the loan is paid they are not concerned with who lives there or whos name the title is in. As long as the vet is not being scammed. this was when we were helping the Vet owner finance the house to another buyer. BUT LIKE ALL LOANS it is the person who you work with at the bank that can make it easy or hard. It also help that the vet is nice and like able. If the vet has been in default after default. they problem wont want to work with them.

    Hope this helps

    Thanks TK. Good to know

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