If you're buying or selling a home in Mililani, you may have heard about VA loan assumptions—and for good reason. With today's higher mortgage rates, assuming an existing VA loan with a lower interest rate can be a game-changer for both buyers and sellers. Here's everything you need to know about how this process works in Mililani's real estate market.

What Is a VA Loan Assumption?

A VA loan assumption allows a buyer to take over the seller's existing VA mortgage—including the remaining balance, interest rate, and repayment terms. Instead of originating a brand-new loan at today's rates (which could be 6.5% or higher), the buyer steps into the seller's shoes and inherits their loan terms, which may carry a much lower rate locked in years ago.

One of the most important things to know: you don't have to be a veteran to assume a VA loan. Both veterans and civilians can qualify, though the process and implications differ slightly for each.

Why VA Loan Assumptions Matter in Mililani

Mililani is home to a large military-connected community, with Schofield Barracks and Wheeler Army Airfield nearby. That means there's a higher concentration of VA-backed mortgages in this area compared to many other neighborhoods on Oahu. For buyers, this creates more opportunities to find homes with assumable VA loans at favorable rates.

Consider this example: A Mililani homeowner locked in a VA loan at 3% a few years ago. If a buyer assumes that loan today instead of getting a new mortgage at 6.5%, they could save over $1,000 per month on their mortgage payment. Over the life of the loan, that's hundreds of thousands of dollars in savings.

How the VA Loan Assumption Process Works

Here are the key steps involved in assuming a VA loan in Mililani:

1. Find a Home with an Assumable VA Loan

Work with a real estate agent who understands VA loan assumptions. Not every seller will advertise this option, so having an experienced agent who can identify these opportunities is essential. Our team specializes in helping buyers and sellers navigate this process in Mililani and across Oahu.

2. Make an Offer with Assumption Terms

Your purchase offer should include terms specifying that the sale is contingent on assuming the existing VA loan. This sets expectations for both parties from the start.

3. Contact the Loan Servicer

The seller's loan servicer manages the assumption process. You'll need to request their assumption package and fee schedule early on. Getting this packet as soon as possible is one of the highest-leverage steps you can take to keep things moving.

4. Qualify with the Lender

Just because you're assuming an existing loan doesn't mean you skip underwriting. You'll need to demonstrate creditworthiness through proof of income, bank statements, credit history, and debt-to-income ratio. The servicer's underwriting department and the Department of Veterans Affairs both review the assumption package.

5. Address the Equity Gap

The equity gap is the difference between the home's purchase price and the remaining loan balance. For example, if the home sells for $800,000 but the remaining loan balance is $650,000, there's a $150,000 gap the buyer needs to cover. This can be handled through cash, gifts, approved secondary financing, or price negotiation.

6. Close the Transaction

Once the assumption is approved, you'll close with a title or closing agent. The entire process typically takes 45 to 90 days, depending on the servicer's workload and how complete your submission is. The VA has directed that assumptions be processed within 45 days, which has helped streamline timelines significantly.

Benefits for Mililani Buyers

• Lower interest rate: Inherit a rate from years ago that's well below current market rates
• Reduced monthly payments: A lower rate means significant monthly savings
• Lower closing costs: Since the loan isn't newly originated, appraisal fees and other costs are often reduced
• Smaller VA funding fee: The assumption funding fee is just 0.5%, compared to higher fees for new VA loans
• Open to civilians: Non-veterans can assume VA loans, expanding access to this benefit

Benefits for Mililani Sellers

• Attract more buyers: Marketing your low interest rate makes your home stand out in a competitive market
• Potentially higher sale price: Homes with assumable VA loans often command a premium because of the rate advantage
• Entitlement restoration: If a veteran buyer assumes your loan, you may be able to restore your full VA loan entitlement through a substitution of entitlement
• Faster sale: The rate advantage can generate more interest and help your property move quickly

Important Considerations

Seller liability: Until the assumption is fully approved and the buyer is qualified, the original borrower may still be liable for the loan. Make sure to confirm release of liability in writing after closing.

VA entitlement: If a non-veteran assumes your VA loan, your entitlement remains tied up until the loan is paid off. Selling to a veteran buyer who can substitute their entitlement is the best way to restore yours.

Processing time: While the VA now requires servicers to process assumptions within 45 days, the full timeline can extend to 60–90 days depending on the complexity. Patience and thorough documentation are key.

Loan must be current: The VA requires that the loan being assumed is current before approval. The loan can become current prior to or as part of the settlement proceedings.

Ready to Explore VA Loan Assumptions in Mililani?

Whether you're a buyer looking to lock in a lower rate or a seller wanting to maximize your home's appeal, VA loan assumptions offer a powerful advantage in today's market. Our team has experience guiding both buyers and sellers through this process right here in Mililani.

Contact Kristy & Austin Nakamura today to learn more about available assumable VA loans in Mililani or to discuss how offering an assumption can help sell your home faster and for more money.