What Happens to My VA Loan After a Divorce?
Between trying to stay civil, making the divorce as smooth as possible for the kids, and splitting your assets, divorce can give you a splitting headache. If you bought a home using your VA loan benefits, chances are things are going to be a little more complicated than they are for civilian couples.
Take a deep breath and start making a plan.
Decide what to do with the house
Once you take out a mortgage, you're responsible for it--even if you get divorced. So, the first thing you'll need to do is to decide what you're going to do with the house. You have a few options:
- One spouse stays in the home and keeps the mortgage
- You sell the home and split any profit
- One spouse stays in the home and you refinance the loan in their name
When the non-military spouse gets the home
This is where divorce and VA loans get tricky. One of the requirements for getting a VA loan is that the military member has to use the home as their primary residence. Which means a loan assumption--where one spouse assumes the loan with the same rates and benefits--is out of the question. The one exception to the rule is if the non-military spouse is a cosigner on the loan.
What about entitlement?
If you decide to sell the home or refinance to a traditional mortgage in your spouse's name, then your entitlement is restored and you're free to use your VA loan benefits to buy a new home. But, if you stay in the home or your non-military spouse is a cosigner on the loan and is keeping it as it, then you won't be eligible to use your VA loan benefit for another home until the loan is paid off.
Separating your assets
If you decide you're not going to sell the house, it's likely you'll also want to remove one spouse from the home's deed (remember, someone can be on a deed even if they're not on the mortgage). The easiest way to do that is usually by filing a quitclaim deed.
Divorce is never easy, but with some careful planning and calm thinking, you'll get through it. The important thing is to look at your long-term situation and do what's best for you and your family.
Thinking you'll want to refinance? Get the lowdown on that process, specific to divorced veterans, here.
Still have questions? Get the facts about VA loans.