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Raoul Rowe • Broker-Owner • 10 Year Army Veteran (E-6)
What are the benefits of a Texas Vet or VA Home Loan?
A Texas Veterans Loan or Department of Veteran Affairs Mortgage has several benefits compared to conventional financing. These benefits include:
- 100% financing: no down payment or monthly mortgage insurance (PMI) payments.
- Competitive interest rates comparable or lower than conventional programs with 20% down payment requirements.
- The home buyer/borrower’s closing costs can be paid by the seller, up to 4% of the amount.
- Flexible credit requirements: Veterans with lower credit scores may qualify for a much lower interest rate than would be obtainable on a conventional program.
- VA Streamline Refinance (IRRRL) allows you to refinance to a lower rate without having to re-qualify.
What is the difference between a Texas Vet Loan and a VA Mortgage?
These two loan programs have a lot of similarities, however, the primary difference is the rates for Texas Veteran Loans are set by the Texas Veterans Land Board and the rates on VA Mortgages are market based and set by the lenders who originate the loans with the VA guarantee. Also, Texas Veteran loans can only be used for home purchases, where as a VA Loan can be used for a home purchase or refinance. Other differences include:
- A ½ percentage point discount on the Texas Vet loan for Veterans with a disability rating of 30% or greater.
- Texas Veteran loans can be originated under the guidelines for a VA Loan, FHA Loan or Conventional loan. In most cases it will be originated as a VA loan but in certain cases it may make sense to originate the loan as FHA or Conventional.
What kind of property can I buy using my Texas Vet or VA Loan Benefits?
Texas Veteran and VA mortgages can be used to purchase most types of properties, including free standing single family homes, town houses and condominiums (if the condo project has Department of Veterans Affairs Approval). Manufactured housing and mobile homes can be more difficult and will be dependent on the lenders specific requirements. Regardless of the type of property you purchase, Veteran Mortgages are only intended for personal home purchases that are going to be occupied by the Veteran and/or their immediate family.
Can I get extra money to add on or fix up the home I am buying?
Unfortunately no, the Texas Vet & Veteran Affairs mortgage program does not allow you to get extra money for improvements or rehabilitation when you buy a house. There is a program available that allows the amount to go above the purchase price of the home if you are making energy efficiency improvements to the home.
What is the “VA guarantee” on a VA Loan?
The Department of Veterans Affairs guarantees the loan for the lender in case the borrower defaults. This does not mean you are automatically qualified or entitled to a Veteran Affairs Mortgage, you still need to qualify based on your income, assets, credit profile etc. It also doesn’t mean if you default the guarantee will pay the mortgage for you and you can stay in the home. Under circumstances of default, the mortgage still goes through the same foreclosure process as conventional programs.
How do I know if I am eligible for a Texas Vet or VA Mortgage?
VA eligibility is dependent on whether you are on active duty, or have been discharged from the Military. There are different requirements depending on how long and when you served in the Military. For complete details please see the Eligibility page of this website, or contact us for assistance to help determine if you are eligible. As long as you are otherwise eligible, and are a Veteran living in Texas then you should be eligible for the Texas Veterans program.
Can I use my eligibility for a Texas Vet or VA Loan to re-finance my current home?
With a Texas Veteran loan the answer is no, they are for home purchases only. However with a VA Loan the answer is yes – you can use your eligibility to re-finance your home using a VA Refinance program. If you currently have a Veterans Affairs Mortgage on your home you may be able to lower your interest rate and payments through a Streamline Re-Finance, also known as an IRRRL (Interest Rate Reduction Re-Finance Loan).
Why do I need to get Pre-Qualified if I am eligible for the Texas Vet & VA Loan Programs?
Being eligible for a Veteran Mortgage through the Department of Veterans Affairs or Texas Vet Land Board, and being qualified are different. Qualification requires that we assess your income, debts and credit history in order to approve you. We can get you pre-qualified in just a few minutes, and will then be able to tell you what your max loan amount is – what price house you can buy. We recommend getting pre-qualified before shopping for a home. Real estate agents and sellers will probably want a pre-qualification letter before they agree to enter a home purchase contract with you. You’ll be better prepared to make an offer on a house when you find one if you get pre-qualified ahead of time.
Do I have to have a house I want to buy before I get pre-qualified?
No, in fact it is better to get pre-qualified before you find a house you want to buy. The reason for this is through the pre-qualification process we will be able to tell you how much you are pre-qualified for, and that way you will know what price range of houses you should be looking at.
How long does it take to get a VA or Texas Veteran Mortgage?
The process can vary depending on the circumstances of your home purchase. However, it is usually dependent on how quickly you can provide us the proper documentation required. As a rule of thumb, it is generally a good idea to give yourself 30-45 days from the time the home purchase contract is signed until the scheduled closing date.
What is a Certificate of Eligibility?
A Certificate of Eligibility (COE) is a document issued to you by the Department of Veterans Affairs certifying that that you are eligible for the VA guarantee. In order to obtain your COE you can fill out form 26-1880 and mail it to the Veterans Affairs service center in Winston Salem, North Carolina. If there is a Veterans Affairs office in your area you may be able to obtain your COE in person by bringing form 26-1880 and your military ID or driver license. However, the easiest way is for us as your lender to pull it through the Department of Veterans Affairs ACE (Automated Certificate of Eligibility) system. As a VA approved lender, we have access to ACE and can usually obtain your COE online in a matter of minutes.
If I have used my VA eligibility before, can I use it again?
Previous use of VA eligibility does not prevent you from obtaining a Veteran Mortgage; however there are a few differences. Depending on your situation your previous mortgage may need to be paid off before your eligibility can be restored. If you intend to sell your home that you previously used your eligibility on, and buy your next home shortly afterwards, then we would help you do a “rapid restore” of your eligibility. Basically we set up the mortgage for your new home, and then once your previous home sells we will quickly get your eligibility restored through the VA so you can obtain final approval and close on your new home.
Can I use a Texas Vet or VA Loan to build a home?
If the builder of your new home has financing for the construction and only requires a deposit from you, then once the home is built you can use your Veteran loan benefits to close on the purchase of your home. If construction financing is not available, it is still possible to use the VA or Texas Vet loan; however, there are several clauses that make the transaction much more complex. Also, with new construction homes if you are using a Texas Vet Loan the home must meet the Environmental Protection Agency’s (EPA) guidelines for ENERGY STAR® qualified homes, and must be ENERGY STAR® labeled and certified.
Do all lenders offer Texas Veteran and VA Loans?
Although many lenders do offer these programs, many community banks and credit unions do not offer them for various reasons. As a division of First Choice Bank, with First Choice Loans Services, Inc. we are able to offer both programs to Veterans. The VALoansTexas.com team with First Choice specializes in originating these loans for Veterans throughout Texas.
Should I use a local lender, don’t they know my market better?
Not necessarily, many local banks and credit unions are not approved lenders and therefore may try to discourage you from using your Veteran benefits. Additionally, since we specialize in Texas Veteran and VA Mortgages we can offer you great service and experience in originating these home loans. Finally, the Department of Veterans Affairs approved appraiser will be a local appraiser who knows the market so there shouldn’t be issues with the appraised value of the property being too high or too low.
What are the interest rate on Texas Vet and VA Mortgages?
Interest rates on Texas Veteran Mortgages are set weekly by the Veteran Land Board. We publish them in the upper right hand side bar of this site. VA Loan interest rates fluctuate with financial market conditions just like conventional loans. The interest rate will be dependent on the current market conditions and the specifics of your home purchase transaction. As a division of Federally Chartered First Choice Bank, First Choice Loans Services is able to regularly offer highly competitive interest rates on the Department of Veterans Affairs loan program. Our rates on VA Loans for 100% financing of your home purchase are usually comparable to conventional loan rates that require a 20% down payment.
What is the VA Funding Fee?
The funding fee is required by law and is charged by the Department of Veterans Affairs, not the lender. In most cases the funding fee is added on to your loan amount and is not paid out of pocket by the Veteran borrower. The amount of the funding fee varies depending on whether the mortgage is the Veteran borrower’s first and/or if there is any down payment on the property and/or if it is a streamline refinance. As mortgage professionals who specialize in VA Loans, we can help to determine what the exact funding fee will be for you. Veterans who are rated for disability and surviving spouses are exempt from the funding fee.
Do I have to put down a down payment for a Texas Vet or VA Mortgage?
No, the Department of Veterans Affairs Program does not require a down payment and allows for 100% financing of the purchase price of the home, without mortgage insurance. The Texas Veteran loan can be a 100% financing as well when underwritten as a VA loan which it most commonly is (as opposed to a conventional of FHA loan). Veteran borrowers will still have closing costs they need to pay, however, the programs allows for the seller of the property to pay the Veteran borrower’s closing costs, up to 4% of the mortgage amount. As mortgage professionals that specialize in VA Loans, we can advise you on how to structure a property purchase contract for seller paid closing costs in order to minimize cash out of pocket closing costs for the home buyer/borrower.
How much are the closing costs on a Texas Vet or VA Loan?
Closing costs on can vary just like they do on conventional loans. The closing costs will be dependent on underwriting and appraisal fees, closing agent’s fees, and any state or regulatory fees. Texas Veteran loans may also have a participation fee. Also, like many mortgages, Veteran loans set up an escrow account for the borrower/home owner’s property taxes and insurance. Escrow accounts require a portion of the insurance and taxes to be “pre-paid”. These pre-paid items are closing costs, but it is important to note that they are dependent on the insurance rates and property taxes for the area where the house is being purchased, and are not related to lender or title company fees.
What loan amount can I get with a Texas Vet or Veteran Affairs Mortgage?
The maximum amount is $417,000. There is also a jumbo program where the Veteran borrower must contribute 25% of the amount over the base $417,000 limit. In certain high cost areas (which are outside Texas) the maximum amount for a VA Loan may be increased, usually up to $729,000. However, the amount each Veteran borrower (and a spouse if applicable) can get is dependent on their income from their jobs and liabilities or debt payments for things like cars or credit cards. As mortgage professionals that specialize in Texas Vet & VA Loans, we can help you determine your debt to income ratio and subsequently let you know the maximum amount you can qualify for. This process is known asPre-Qualification.
Can I have a co-borrower on my Texas Veteran or VA Loan?
Yes, but who can be a co-borrower is somewhat limited. Generally speaking only a spouse of the Veteran, or another Veteran can be co-borrowers on a Texas Vet or Department of Veterans Affairs mortgage.
What forms do I need in order to obtain a Texas Veteran/VA Home Loan?
In order to obtain a Texas Vet or Veterans Affairs Mortgage, you will need to provide several types of documents regarding both Military service and personal income. These documents include but are not limited to: Certificate of Eligibility; Statement of Service (if on active duty); A copy of your DD214 (if the you have been discharged/separated from the Military);
Past 2 years W2 statements; One month of most recent LES or pay stubs; Two months of most recent bank statements. These documents will be needed in conjunction with the formal 1003 application and disclosures. Additional documents may be required depending on each borrower’s unique situation or circumstances. As mortgage professionals that specialize in Texas Vet and VA Loans we can determine the specific documents you will need and provide you with a complete application package that contains the disclosures and forms required for obtaining the required documents.
Do past credit issues effect my ability to get a Texas Veteran or VA Mortgage?
Texas Vet and Veteran Affairs loan approvals are determined by the borrower’s recent credit history in the past 12 months and your current credit score. So if you have had some credit issues in the past, but have been on time with your payments recently we may be able to get you approved. If your credit score is close to the minimum requirement, we can give you some insight and help on how to possibly get it increased to meet our minimum requirements.
Can I get a Veteran Loan if I have filed bankruptcy?
Yes, but there are conditions. If it was a Chapter 13 bankruptcy then it must be at least 12 months since the bankruptcy before the you can obtain Department of Veterans Affairs financing. If the bankruptcy was a Chapter 7 bankruptcy then it must be 24 months from the discharge date. Also, you must have a relatively clean credit history since the bankruptcy with no late payments or collection accounts.
I heard VA appraisers can make a purchase difficult. Is this true?
There is not any truth to this statement. The Appraisers are randomly selected by the Department of Veterans Affairs from a pool of registered appraisers in the area of the home purchase. This is done to protect the Veteran borrower and the Department of Veterans Affairs. They are ensuring that the home is not being purchased for over market value and that the home meets certain safety and quality guidelines. Most VA approved appraisers are also “regular” appraisers who do appraisals for conventional programs as well. They register with the Department of Veterans Affairs in order to obtain extra work and provide a service to Veterans. They are not any easier, or more difficult to work with than any other appraiser. Like all appraisers, they are independent 3rd parties hired to assess the value of a property.FAQ – http://www.valoanstexas.com/frequently-asked-questions/