VA Entitlement After an Assumption: Release of Liability & SOE for Sellers
Learn how to protect yourself and restore your VA loan benefit when a buyer assumes your mortgage.
Key Takeaways
- You must request a Release of Liability so you’re not on the hook if the buyer defaults.
- You need a Substitution of Entitlement with an eligible veteran buyer to fully restore your VA benefit.
- Servicers typically decide within 45 days, with appeal rights if they deny.
Selling a home with a VA-backed mortgage can be a great way to attract higher offers and sell faster — especially when your loan carries a lower interest rate than what’s available on new mortgages today. But as a veteran seller, you need to know what happens to your VA entitlement and your financial liability once that assumption goes through.
Most sellers have two big questions:
- Will I still be responsible for the loan after the buyer takes over?
- Can I use my VA entitlement again to buy another home?
The answers depend on two processes every veteran seller should understand:
- Release of Liability (ROL): protects you from ongoing responsibility
- Substitution of Entitlement (SOE): restores your VA eligibility in the future
Together, these determine whether you’re financially released from the assumed loan and whether your VA home loan benefit is restored for future use. This guide walks you through both, so you can sell confidently and protect your benefits.
Release of Liability (ROL) is the official approval from the VA or servicer stating that the seller of a home with a VA-guaranteed loan is no longer financially responsible for the loan after it’s assumed by a buyer.
How ROL works:
- The seller completes and submits VA Form 26‑6381: Application for Assumption Approval and/or Release from Personal Liability to the Government on a Home Loan.
- The loan must be current (or brought current at closing), the buyer must assume full liability, and the buyer must meet underwriting standards comparable to a veteran borrower.
- Important: Being released from liability does not automatically restore your entitlement – it just releases you from payment responsibility.
Substitution of Entitlement (SOE) is the process by which an eligible veteran buyer substitutes his or her entitlement for the seller’s entitlement, thereby freeing the seller’s VA benefit for future use.
These are the key details:
- Only a veteran buyer (or eligible surviving spouse in some cases) can perform an SOE. Civilians / non-veteran buyers cannot substitute entitlement for the seller.
- The veteran seller, the veteran buyer, and the servicer/VA must coordinate the paperwork, including VA Form 26‑8106 Statement of Veteran Assuming GI Loan (Substitution of Entitlement).
- When executed correctly, the seller’s entitlement is restored and the buyer’s entitlement is charged for the assumed loan amount.
- Get your entitlement back. If your VA benefit (entitlement) is tied up in this loan and you plan to buy another home using a VA loan in the future, you’ll want an SOE to restore your entitlement now rather than later.
- Protect your liability. Getting the Release of Liability protects you if the buyer later defaults. Without it, you risk being held responsible for a claim that the VA may pay out.
- Sell your home smarter. Offering an assumable VA loan with clear ROL and SOE mechanics can make your home more attractive to both veteran and non-veteran buyers, potentially enhancing both the value and speed of sale.
Below is a quick reference to the key forms and steps involved in the entitlement and liability process:
Application for Assumption Approval and/or Release from Personal Liability
Used by seller (and buyer) to request assumption approval and the seller’s ROL.
Assumption Entitlement Acknowledgement
New form requiring the veteran seller to acknowledge how a loan assumption may impact their entitlement.
Statement of Veteran Assuming GI Loan (Substitution of Entitlement)
Used when a veteran buyer substitutes their entitlement for the seller’s, enabling the seller’s restoration.
Steps to follow (at a glance):
- Seller and buyer agree to an assumption.
- Buyer (veteran or civilian) applies to assume the loan; servicer reviews credit/underwriting.
- Seller completes Form 26-6381 for assumption approval and indicates request for ROL (and possibly entitlement substitution).
- If a veteran buyer will substitute entitlement, Form 26-8106 is completed.
- The seller signs Form 26-10291 to acknowledge potential for impact to their entitlement (regardless of if the buyer is a veteran or civilian).
- Servicer decides (typically within 45 calendar days) whether to approve assumption/ROL.
- If approved: seller receives Release of Liability, buyer assumes loan, and if applicable, the servicer ensures substitution of entitlement and restoration of seller’s entitlement.
- The servicer reports the change in ownership and the ROL/Substitution event to the VA’s VALERI system.
Once a buyer applies to assume your VA-backed loan, the process moves through several layers of review, primarily handled by your loan servicer, with the VA overseeing in certain cases. Understanding who has the authority to decide, and when, is key to keeping your release and entitlement on track.
Scenario 1: Servicer Authority (most assumptions are approved here)
- Most VA loan servicers today have automatic authority from the Department of Veterans Affairs to process and approve the assumption/ROL
- If they do, they must make a decision within 45 calendar days of receiving a complete assumption application.
Scenario 2: VA Prior Approval
- If your servicer does not have automatic authority, or if the buyer’s profile is unusual (e.g., self-employed income, credit edge cases, joint assumptions, etc.) then the file must be sent to a VA Regional Loan Center for prior approval.
- The VA typically reviews and issues a decision within 35 calendar days of receiving the full application.
Scenario 3: If the Assumption or ROL Is Denied
- If the assumption or Release of Liability is disapproved, either party (the seller or the buyer) has the right to appeal the decision to the VA within 30 calendar days of notification.
Many sellers and their agents misunderstand how the VA assumption process, release of liability, and substitution of entitlement work. That’s where Roam comes in.
We’re experts in helping sellers with VA loans
- We market your loan to attract qualified buyers
- We handle the assumption process
- We ensure you get to walk away from your home without walking away from the value of your loan
Here’s how we assist:
- We facilitate eligibility and assumption readiness: verifying occupancy intent, income/credit, understanding the funding fee and assumption costs.
- We support you and the seller with the entitlement and liability details: ensuring the seller requests a Release of Liability, understands the entitlement impact, and you review how the assumption affects the veteran’s future VA benefits.
- We provide secondary financing to help bridge the equity gap, enabling buyers to put as little as 5% down while ensuring the VA lien stays first and you’re set up for underwriting success.
We partner with expert lenders and agents who are experienced with VA assumptions to ensure a seamless process.
Frequently asked questions
No – your entitlement isn’t lost, but it stays tied to the loan the civilian buyer assumes. Because civilians can’t substitute entitlement, you won’t regain that portion of your benefit until the loan is paid off or later assumed by a veteran who performs SOE.
You will still be released from liability, but your entitlement will remain attached to the loan. You won’t fully restore your entitlement until the loan is paid in full or a veteran buyer later substitutes their entitlement.
Yes. Many sellers can use remaining entitlement to purchase another home with a VA loan. You may need a down payment if your remaining entitlement isn’t enough to cover the new loan amount.
You can appeal within 30 days. Denials usually stem from an incomplete file, an unqualified buyer, or a delinquent loan. Once corrected, the servicer or VA can reevaluate the request.