After selling a home with a VA-guaranteed loan, is the veteran still liable if the new owner defaults?

When a veteran sells a home that is financed with a VA-guaranteed loan, the veteran does indeed remain liable for the loan even after the transfer of ownership. This persistent liability stems from the nature of VA loans, where the original borrower is responsible for ensuring that the loan is paid off, despite having sold the property to someone else. The VA loan is a federal benefit provided to veterans, and it does not discharge the veteran's obligation simply because the property has been sold.

The new owner, while they take possession of the home, does not automatically assume the existing mortgage unless the lender explicitly allows for a loan assumption. Until the loan has been fully paid off or refinanced into a different loan under the new owner's name, the original veteran borrower remains financially responsible for the debt.

Understanding the implications of this ongoing liability is essential for veterans when considering selling their home, as any default by the new owner could adversely affect the veteran’s credit and create further financial repercussions.