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Under what conditions can a Veteran Affairs (VA) loan be assumed?

  1. Always assumable

  2. With VA approval if the loan was made after 1988

  3. Only under government orders

  4. Never assumable

The correct answer is: With VA approval if the loan was made after 1988

A Veteran Affairs (VA) loan can be assumed under specific conditions laid out by the VA. If the loan was made after 1988, it is only assumable with approval from the VA. This requirement ensures that the new borrower meets the credit and income qualifications necessary to take over the loan, maintaining the integrity and risk profile of the VA loan program. In contrast, loans made before 1988 could typically be assumed without this requirement for VA approval, providing more flexibility in transferring loans. Therefore, understanding the condition set forth for loans after 1988 is crucial for both buyers and sellers considering the assumption of a VA loan. This mechanism protects the lender and the VA from potential financial risks associated with unqualified borrowers taking over loan obligations.