VA Loan Assumption Process in 2026: Approvals, Entitlement, Fees, and Forms

VA loans are unique among major loan programs in one specific respect: a non-veteran can assume the loan, and the loan stays VA-guaranteed even after that happens. That single fact is the source of two persistent confusions on the broker side, and one painful misunderstanding on the veteran side. The word "assumable" gets read as "anyone can take it over without approval." It cannot. And selling veterans often do not realize that letting a non-veteran assume their loan leaves their VA entitlement tied up in that property until something specific happens to release it.

This guide walks through how VA assumptions actually work in 2026, with section citations across the regulation, the active VA Loan Guaranty Circulars, and the forms involved.

Are VA loans really assumable?

Yes, with VA approval. The default rule for any VA loan with a commitment made on or after March 1, 1988 is that the loan is not assumable without approval. 38 CFR § 36.4309(a)(1) requires every newer VA loan to carry instrument language that says, verbatim:

"This loan is not assumable without the approval of the Department of Veterans Affairs or its authorized agent."

That clause is the operative due-on-sale framework for VA loans. There is a narrow set of transfers that do not trigger acceleration even without VA approval: transfer to a relative on the borrower's death, addition of a spouse or children as joint owners, transfer to a spouse pursuant to a divorce decree or property settlement, and transfer into a revocable inter vivos trust where the borrower remains a beneficiary. Those are family and estate carve-outs, not a general "anyone can take it over" rule.

The rare loans that are freely assumable are loans where the commitment was made before March 1, 1988. § 36.4326(f) governs those: the veteran can dispose of the property, apply to VA, and receive an automatic release of liability without an underwriting review of the assumer. Those loans are 38-plus years old at this point and still occasionally show up in inherited-property and seller-financing scenarios, but they are no longer the typical case.

For every other VA loan, the assumer needs to be reviewed and approved.

What are the two assumption pathways?

VA Loan Guaranty Circular 26-23-10 (May 22, 2023): VA Assumption Updates sets out the policy framework, and its two Exhibits define two distinct pathways with different document stacking orders:

Exhibit A: Holder/Servicer Approved Assumptions. This is the default pathway when the holder or servicer has automatic authority and the proposed assumer meets the standard criteria. The stacking order is comparatively light: cover letter, VA Funding Fee Receipt, VA Form 26-8937 (Verification of VA Benefits) where applicable, VA Form 26-8106 / 26-1880 for substitution-of-entitlement scenarios, evidence the loan was current at the time of transfer, and a Quit Claim Deed.
Exhibit B: Assumption Appeals and VA Prior-Approval Requests. This is the escalation pathway when the holder or servicer does not have automatic authority, when the assumption requires VA prior approval, or when an assumption decision is being appealed. The stacking order is heavier: cover letter naming the holder and servicer with VA ID numbers, evidence the loan is current or will be brought current through the assumption, the original note and all riders, the Purchase or Assumption Contract (or Divorce Decree), VA Form 26-8937 if applicable, the Uniform Residential Loan Application (URLA), the Loan Estimate, VA Form 26-8497 (Request for Verification of Employment), and any further documentation the appeal requires.

Routing the wrong pathway adds weeks to the assumption timeline. If the holder has automatic authority and the assumer is creditworthy and meets the standard criteria, do not stack the file as a prior-approval submission.

What does the assumption fee actually cost?

This is the part of the answer that lives in two places at once and has to be cited carefully. The operative current text is in Circular 26-23-10 Change 1 (February 23, 2024), which replaces Section 2(1)(f) of the parent Circular in its entirety. Per Change 1, the holder or servicer may charge an assumption processing fee not to exceed $300, intended to cover the costs of underwriting, processing, and closing the assumption. If the loan is disapproved, $50 of that fee (the portion attributable to changing the loan records) must be returned to the party who paid it if the loan remains disapproved after the 60-day appeal window.

When a broker, servicer, or holder cites the assumption fee, the right answer is the Change 1 text. The parent Circular's original Section 2(1)(f) is superseded.

Allowable charges to the assumer per Change 1 (irrespective of the assumer's veteran status) are:

The assumption processing fee above
The VA funding fee, unless the assumer is exempt or the transaction is an unrestricted transfer such as an assumption resulting from a divorce
Credit report
Recording fees and recording taxes
Applicable taxes, hazard insurance, flood insurance, and assessments
Title examination, title insurance, and endorsements
Fees approved in advance as local deviations

Anything outside that list cannot be charged to or paid by the assumer.

What is the locality variance and how much is it?

Separate from the $300 processing fee, Circular 26-24-5 (February 26, 2024): VA Assumption Locality Variance authorizes a second, regional fee that the holder may charge in addition to the processing fee, based on the geographic location of the subject property. The authority for this lives in 38 CFR § 36.4313(d)(1)(ix), which permits VA to issue local variances to address regional cost differences in assumption processing.

Exhibit A to Circular 26-24-5 carries the regional fee table. The four region amounts are:

| Region | Locality Variance | States | |---|---|---| | Northeast | $409 | CT, ME, MA, NH, VT, NJ, NY, PA, RI | | Midwest | $386 | IL, IN, IA, KS, MI, MN, MO, NE, ND, OH, SD, WI | | South | $404 | AL, AR, DE, DC, FL, GA, KY, LA, MD, MS, NC, OK, PR, SC, TN, TX, VA, WV | | West | $463 | AK, AZ, CA, CO, HI, ID, MT, NV, NM, OR, UT, WA, WY |

Two things to note. First, the locality variance is in addition to the $300 processing fee, not in place of it. A West-region assumption can carry up to $763 in fee charges to the assumer before the funding fee, credit report, recording, title, and other allowable items are layered on. Second, Puerto Rico falls under the South region per Exhibit A, which is the specific mapping decision that catches operators in PR-located transactions.

What about the new Form 26-10291?

Circular 26-24-9 (April 25, 2024): New VA Form 26-10291 - Assumption Entitlement Acknowledgement introduced a form that exists for one reason: VA noticed that selling veterans frequently did not understand how letting their loan be assumed by a non-veteran would affect their ability to use or reuse their VA home loan benefit.

Per the Circular, the holder is expected to provide Form 26-10291 to the selling veteran immediately after an application for an assumption is received on their loan. The form should be signed by the selling veteran as soon as possible, and no later than closing. VA expected holders to begin using the form on assumption applications received on or after the date 60 days after the Circular's publication.

The form does not change the substance of how entitlement works. It exists so the veteran cannot later claim they did not understand the consequences. The substance is this: when a non-veteran assumes a VA loan, the original veteran's entitlement remains tied up in that property until something specific releases it.

Does the veteran's entitlement get released?

There are two distinct concepts here and they are routinely conflated:

Release of liability is whether the original veteran is still on the hook to indemnify VA if the loan defaults. This is governed by 38 CFR § 36.4326(h)(1): for loans with a commitment made on or after March 1, 1988, the original veteran is released from further liability to VA if the assumer is creditworthy AND the assumer is contractually obligated to assume the loan and to indemnify VA for any claim paid under the guaranty as a result of a default.
Restoration of entitlement is whether the veteran's VA home loan benefit becomes available again to use for another property. This is a separate event. Entitlement is only restored when the assumer is also a veteran AND substitutes their own entitlement for the original veteran's, typically via VA Form 26-8106 / 26-1880 in the Exhibit A or Exhibit B stacking order.

A veteran can be released from liability under § 36.4326(h)(1) and still have their entitlement consumed by the assumed loan. That is the scenario Form 26-10291 was created to make sure the selling veteran understands. If the assumer is a non-veteran, the original veteran's entitlement is going to stay tied up until the loan is paid off, refinanced, or assumed again by a substituting veteran.

Can the assumer get a second mortgage at the same time?

Yes, with conditions. Circular 26-24-17 (August 11, 2024): Secondary Borrowing Requirements on Assumption Transactions addresses the scenario where an assumer needs additional financing in addition to assuming the existing VA-guaranteed loan. VA's Lenders Handbook M26-7 did not specifically address this, so the Circular fills the gap.

Per the Circular, when processing an assumption with simultaneous secondary borrowing, the holder is expected to:

Lien position. Take the steps necessary to ensure the secondary borrowing is subordinate to the VA-guaranteed loan, which may include obtaining a subordination agreement.
Documentation. Document in the assumption loan file the secondary lender's name, the amount of the secondary borrowing, and the repayment terms agreed to by the assumer.
Allowable purposes. Proceeds may be used to pay allowable closing costs needed to close the assumption or for amounts due the seller at closing as part of the assumption transaction. No cash back to the assumer.
Underwriting. The recurring monthly payment for any secondary borrowing must be considered in the assumer's debt analysis on VA Form 26-6393, Loan Analysis, and in any automated underwriting feedback.
Interest rate. May exceed the rate on the VA-guaranteed loan and is negotiated between the assumer and the secondary lender.
Assumability of the secondary loan. If the secondary borrowing is not assumable, the holder is to counsel the assumer that this may restrict their ability to sell the property to another assumer in the future.
Grace period. The secondary borrowing must include a reasonable grace period before late charges and before any foreclosure action by the secondary lender.

The structural logic across the Circular is straightforward: VA does not block secondary borrowing on assumptions, but it has to be processed in a way that does not jeopardize the first-lien position of the VA-guaranteed loan or the assumer's ability to repay.

How does the funding fee work on assumptions?

The funding fee is allowable as a charge to the assumer per Change 1, unless the assumer qualifies for an exemption under 38 CFR § 36.4509 or the assumption is an unrestricted transfer (the most common example being an assumption that results from a divorce). The procedural framework for verifying exemption status and processing refunds is Circular 26-23-19 (October 2, 2023): Funding Fee Exemption and Refund Procedures for Lenders, which we covered in detail in VA Funding Fee in 2026: Current Rates, Exemptions, and Refund Procedures.

Two pieces specifically matter on the assumption side. First, an assumer who is exempt under § 36.4509 does not pay the funding fee on the assumption. Second, a non-veteran assumer is not eligible for the disability-based exemption categories at all. Those exemptions apply to veterans receiving compensation for service-connected disability, surviving spouses meeting the regulatory conditions, and Purple Heart recipients on active duty.

Common pitfalls

Five patterns generate the most file friction on VA assumptions:

Treating "assumable" as "no approval needed." Post-March-1, 1988 loans are not freely assumable. § 36.4309(a)(1) requires VA or its authorized agent to approve the assumption. This is the most expensive misread because it usually shows up as a contract written without any assumption-approval contingency.
Routing an Exhibit A transaction as an Exhibit B prior-approval submission. The pathways have different document stacking orders for a reason. If the holder has automatic authority and the assumer is creditworthy, the Exhibit A pathway is the right route. Mis-routing adds weeks.
Citing the parent Circular's original Section 2(1)(f) for the assumption fee. Change 1 replaced that paragraph in its entirety. The current operative cap is $300, and the source citation chain for it has to include both the parent and Change 1.
Quoting the $300 processing fee without the regional locality variance. A West-region assumption can carry up to $763 in fee charges before any other allowable items. Quoting only the $300 understates fees by between $386 and $463 depending on region.
Conflating release of liability with restoration of entitlement. § 36.4326(h)(1) releases the veteran from indemnifying VA on default if the assumer is creditworthy and contractually agrees to indemnify VA. It does not restore the veteran's entitlement. Restoration requires a substituting-veteran assumer. Form 26-10291 exists to make sure the selling veteran understands this before they sign.

For more agency guideline breakdowns, see the Agency Guidelines series. Related guides: VA funding fee in 2026, FHA appraisal requirements, Freddie Mac condo approval.

This article is for informational purposes only and is not professional advice. Always verify against 38 CFR Part 36 (especially §§ 36.4309, 36.4313, 36.4326, and 36.4509), the active VA Loan Guaranty Circulars 26-23-10 and Change 1, 26-24-5 and Exhibit A, 26-24-9, 26-24-17, and 26-23-19 before making decisions on a specific assumption file.