Can I assume someone's VA loan in Colorado Springs?

What a VA assumption actually is

In an assumption, the buyer takes over the seller's existing mortgage as it stands: the remaining balance, the original interest rate, and the remaining term. No new loan is originated. If a seller has a VA loan at 3% with 24 years left, a qualified buyer steps into that loan at 3% with 24 years left.

That is what makes assumptions interesting in a higher-rate market, and why they come up often in a town with as much military turnover as this one. Loans written in 2020 and 2021 at very low rates are still out there, and they are still assumable.

In my experience, VA assumables are most interesting, and most doable, whenever the buyer has the money to cover the gap. That is the whole ballgame, and it is worth understanding before you fall in love with a rate.

Who can assume one, and what it costs

The buyer does not need to be a veteran. A civilian who meets the servicer's credit, income, and debt-to-income standards can assume a VA loan, which is unusual — conventional loans are almost never assumable after origination. For loans closed on or after March 1, 1988, the holder of the loan or the VA has to approve the transfer.

The costs are modest compared with a new loan:

• VA funding fee: 0.5% of the loan balance being assumed, unless the buyer is exempt. On a $320,000 balance, that is $1,600. A new VA purchase loan runs 1.25% to 3.3% depending on down payment and whether it is a first use.
• Assumption processing fee: capped by VA Circular 26-24-5 at $300 if the servicer has automatic authority, or $250 if the file requires prior approval, plus a locality variance and the actual cost of a credit report. Colorado sits in the VA's West region, where that locality variance is $463 — the highest of the four regions. So the realistic ceiling here is closer to $763 than the $300 figure quoted in most national articles.

There is no new origination fee and no mortgage insurance. The servicer will also want to know the buyer intends to occupy the home as a primary residence.

The equity gap, and the right way to think about it

Here is the part that decides most of these deals. The seller's remaining loan balance is almost always well below what the home is worth now. The buyer has to pay the seller that difference, in cash or through separate financing.

The instinct is to ask "can I come up with that?" The better question is what that money would do somewhere else. What I look at is the literal return on the investment: how much you are going to pull out in order to cover that gap, and how much you would be making on that money if you left it where it is, compared with what you would pay to borrow it instead.

Often, if you take out a second loan for the gap, it does not make sense. It becomes more expensive than the mortgage would have been had you just done a new loan on the whole purchase. But every situation is different, which is why you work this out with a loan officer, or do the math yourself before you get attached to the idea.

A hypothetical example. The rates below are illustrative inputs, not current quotes — run your own numbers with a lender.

Suppose a home is priced at $525,000 with $320,000 remaining on the seller's VA loan at 3% and 24 years left. The gap is $205,000. Suppose a new 30-year loan on the full price would be available at 6.3%.

Paying the gap in cash saves roughly $1,690 a month against the new loan. If that $205,000 would otherwise earn 5% somewhere else, you are giving up about $854 a month in earnings to save $1,690 — the assumption wins clearly.

Borrowing the gap is a different story. At those inputs it lands within about $40 a month of simply getting a new loan, which is almost exactly what I see in practice. Change the second loan's rate or term and the answer flips. That is the calculation worth doing, and it is specific to your numbers, not to assumptions in general.

Two things sellers have to get right

These are separate issues and they get confused constantly. Missing either one can follow a seller for years.

Release of liability. An assumption does not automatically release the seller from the debt. The seller has to obtain a formal written release from the servicer or the VA. Without it, the seller can still be on the hook if the new borrower stops paying, and the loan can keep showing on their credit.

Entitlement. Unless the buyer is an eligible veteran who substitutes their own entitlement, the seller's VA entitlement stays tied to that property until the loan is paid off. For a service member who expects to buy again with a VA loan at the next duty station, that is a significant consequence. If the buyer is a veteran and does substitute entitlement, the seller's entitlement is restored after closing and recording. Sellers commonly make closing contingent on that substitution.

If you are selling and plan to use your benefit again, see Is there a VA loan limit in El Paso County? and Can I keep my Colorado Springs home as a rental and use my VA benefit again?

How the Colorado contract handles an assumption

This is where a Colorado transaction differs from the generic advice, and where assumptions most often come apart on paper rather than in underwriting.

The Colorado Real Estate Commission's Contract to Buy and Sell Real Estate (Residential), form CBS1, has been mandatory since January 1, 2026, and it addresses assumptions directly.

Section 4.6 (Assumption) sets out the Assumption Balance, the existing rate and payment, a cap on the loan transfer fee the buyer will pay, and a checkbox for whether the seller will or will not be released from liability. If release is required, compliance is evidenced by delivery of a letter of commitment from the lender. That checkbox is not a formality — it is where the release-of-liability issue above either gets handled or gets missed. Section 4.6 also provides that the contract terminates if written consent from the seller's lender is not received by all parties and the closing company on or before closing.

Section 5.4 (Existing Loan Review) requires the seller to deliver the loan documents by the Existing Loan Deadline, gives the buyer a right to terminate by the Existing Loan Termination Deadline based on anything unsatisfactory in them, and then states plainly that if the lender's approval is not obtained by the Loan Transfer Approval Deadline, the contract terminates on that deadline.

So the entire deal rests on one date in section 3's dates-and-deadlines table. Set it too tight and a perfectly good transaction dies on a technicality.

How long it really takes

VA Circular 26-23-27 directs servicers to make a decision within 45 days of receiving a complete assumption package. That is the rule. Here is the practice.

That 45 days runs from the day the servicer actually has everything it needs. They could come back and say they are missing documentation, and that can reset the clock. That is my observation from doing these, not an official reading of the circular, so treat it as a planning assumption rather than a rule.

When I write an offer on an assumption, I am upfront about it. I put in a date, and I build in milestones to check in along the way, because it could be 60 days out and honestly you don't know. It is a dance, and both parties have to be willing and show real commitment to following through.

One more thing that matters more than people expect: it takes continued inquiries and calling on the buyer's side. You have to be incentivized to get the mortgage company to respond, because frankly there isn't a lot of money in it for them. That is my opinion based on practice. Every one we have tried has been successful — it just takes time.

Finding an assumable loan in Colorado Springs

Assumable listings show up in the MLS here, so this is searchable rather than something you have to stumble into. We can set up a custom search that notifies you when one comes on, and then look at what the actual gap is to see whether it is reasonable for your situation before you go any further.

The market conditions matter too. In a buyer's market, sellers are more willing to offer the assumption, and it becomes a marketing opportunity for them. That low-rate loan is an asset, and sellers are increasingly treating it like one.

What could change the answer

• The size of the gap. A large balance remaining and a modest price difference makes this far easier. The reverse makes it a cash problem.
• What your cash is otherwise doing. The return-on-investment comparison above changes with rates, with what you would earn on the money, and with how long you plan to hold the home.
• Whether the buyer is a veteran. Substitution of entitlement is only possible if the buyer is an eligible veteran, and that changes the deal considerably for the seller.
• Your timeline. If you are reporting to a duty station on a fixed date, an assumption may not fit. See How early should I start buying a house before a PCS to Colorado Springs?
• The servicer. Turnaround varies, and a servicer that treats assumptions as a low-priority queue changes what deadlines are realistic.
• VA guidance. Funding fee rates, processing fee caps, the locality variance, and circular guidance all change. Verify current figures before relying on them.

When to talk with a professional

A VA-experienced loan officer should be running the gap math with you and confirming entitlement, restoration, and whether substitution is available. See How do I choose a lender for a VA loan in Colorado Springs? The servicer holding the loan, not the VA directly, is who processes the assumption and issues the release of liability. If a seller's release or entitlement situation is complicated, that is a conversation for a real estate attorney, and service members can start with their installation's legal assistance office. I am a real estate professional, not a lender or an attorney, and my role here is the contract, the deadlines, and keeping the transaction moving.

About the author

Weldon Hobbs is a Colorado Springs REALTOR® and co-founder of Team Hobbs Realty. He is a member of The Platinum Group, REALTORS®, Colorado Springs' #1 independent brokerage, which pairs deep local expertise with premium marketing exposure. A U.S. Air Force Academy graduate and retired Air Force veteran, he and his family made more than 10 military moves. Since 2006, he and his wife, Kristen, have bought and sold their own homes, managed a portfolio of rental properties, and guided others through their own real estate decisions. He has also helped both family members and clients downsize, where the decisions are often complex and the process can feel overwhelming. Drawing on his background as a PMP® (Project Management Professional), he helps people break those decisions into clear, manageable steps.

Since beginning his real estate career, he has ranked in the top 7% by sales volume among the more than 4,000 members of the Pikes Peak Association of REALTORS®. He works with military families, seniors and downsizing clients, luxury and premium home sellers, and people relocating to Colorado Springs. He developed the Life → Wealth → Real Estate™ method, hosts the national YouTube channel Life & Real Estate Without Regret, and holds an MBA along with the SRES® (Seniors Real Estate Specialist®), MRP (Military Relocation Professional), and Certified Financial Coach credentials. More about Weldon

Sources

• Colorado Real Estate Commission, Contract to Buy and Sell Real Estate (Residential) (CBS1), adopted August 5, 2025, mandatory use January 1, 2026 — §§ 3.1, 4.6, 5.1 and 5.4. dre.colorado.gov
• U.S. Department of Veterans Affairs, Circular 26-23-10, VA Assumption Updates (release of liability, substitution of entitlement, unrestricted transfers). benefits.va.gov
• U.S. Department of Veterans Affairs, Circular 26-23-27, Noncompliance in Processing Assumptions (45-day decision requirement), December 20, 2023. benefits.va.gov
• U.S. Department of Veterans Affairs, Circular 26-24-5, Exhibit A, VA Assumption Locality Variance (Colorado is in the West region; $463), February 26, 2024. benefits.va.gov
• U.S. Department of Veterans Affairs, VA Lender's Handbook M26-7, Chapter 5 (assumptions and unrestricted transfers).