Texas Veterans Land Board Loan vs VA Loan

Texas Vet loan and VA loan are strong financing options offering competitive, low interest rates and flexible qualification requirements to eligible veterans, active-duty service members, and qualifying surviving spouses.

Read on to explore the key features of these home loan programs and find out what works best for you.

Comparing Texas Veterans Land Board Loan vs VA Loan Programs

Let’s take a closer look at the benefits offered by these home loan programs.

What is a Texas Vet Loan?

Available only in Texas, the Texas Vet program is a state-run program managed by the Texas Veterans Land Board (VLB).

For veterans, it’s commonly paired with a VA loan to access a lower interest rate when purchasing a primary residence in Texas.

Key features of Texas Vet loans:

• Lower Interest Rates: Rates are set by the VLB and are often lower than standard VA loan rates because of state subsidies.
• No Down Payment: There’s no down payment and no PMI if you pair a Texas Vet loan with a VA loan.
• Extra Discounts: Veterans with a service-connected disability rating of 30% or higher may receive a discounted rate.

The VLB offers the following loan programs, although there are no refinancing options for existing home loans:

• Home loans with competitive interest rates, often paired with a VA loan.

• Land loans with a minimum 5% down payment. (standalone and cannot be paired with a VA loan)
• Home improvement loans up to $50,000 to repair and improve an existing home. (standalone and cannot be paired with a VA loan)

What Is a VA Loan?

A VA loan is backed by the U.S. Department of Veterans Affairs (VA), which means the government guarantees a portion of the loan, allowing lenders to offer better terms. This federally backed mortgage program is available across the U.S.

Key features of VA loans:

• 0% Down Payment and No Private Mortgage Insurance (PMI): Homeownership becomes more accessible with zero down and no PMI.
• No Set Maximum Loan Limit: The VA no longer sets loan limits if a borrower has full entitlement, which means you can borrow as much as you qualify for depending on lender approval, your financial profile, and the home’s appraised value.
• More Flexible Credit Guidelines: The VA doesn’t set a minimum credit score, and lenders often accept lower credit scores compared to conventional loans.

Here are common VA loan types:

• Purchase loans offer competitive interest rates with zero down and no private mortgage insurance (PMI). In Texas, veterans may pair these loans with the Texas Vet program for lower state-supported rates.
• Cash out refinance loans allow you to convert part of your home equity into cash. (not eligible for the Texas Vet program)
• Interest Rate Reduction Refinance Loan (IRRRL), or Streamline Refinance Loan, lets you refinance an existing VA loan to get a lower rate. (not eligible for the Texas Vet program)

Key Takeaway: The VA loan is a federally backed mortgage program, whereas the Texas Vet program is a state benefit that can help you obtain lower interest rates when paired with a VA loan.

Texas Vet Loan vs VA Loan Eligibility

Both programs are available to veterans, active-duty service members, and qualifying surviving spouses. You must meet each program’s and the lender’s income and credit standards to qualify.

Here are other eligibility requirements for a VLB loan:

• You’re a bona fide and legal Texas resident at the time of application.
• You meet the program’s service requirements.
• You intend to live in the home as your primary residence within 60 days of closing.

For VA home loans, here are the eligibility requirements:

• You meet the program’s service requirements.
• You have a Certificate of Eligibility (COE).
• You plan to live in the home as your primary residence.

Remember: Each program has its own service and residency requirements, so be sure to check the eligibility rules first before applying.

Texas Vet Loan vs VA Loan Rates

Both programs commonly offer fixed-rate home loans with 15 to 30-year terms. Here’s how the rate structure works for each program:

Interest Rate Structure

The VLB sets Texas Vet program rates and updates them weekly, while lenders set VA loan rates daily according to market conditions.

Credit Score Influence

The borrower’s credit score doesn’t influence their Texas Vet rates, although lenders may still consider their financial profile.

On the other hand, VA loan rates often vary based on the borrower’s credit profile, which means a higher score may lead to lower interest rates.

Where to Get Texas Vet and VA Loans

The Texas Veterans Land Board and U.S. Department of Veterans Affairs don’t lend directly to borrowers. Instead, they work with participating lenders, such as banks, mortgage companies, and credit unions. Both programs set clear guidelines that lenders must follow.

Which Loan Fits Your Situation?

Here are several common scenarios where the Texas Vet program or VA loan may make the most sense:

• Buying your first home in Texas: Pair a VA loan with the Texas Vet program for lower rates.
• Buying land in Texas: Eligible veterans can buy land with as little as 5% down with the Texas Vet land loan program.
• Planning to refinance later: The VA IRRRL streamline refinance makes refinancing smoother.
• Disabled veteran: Eligible veterans with service-connected disabilities may be exempt from the VA funding fee.

Texas Vet vs VA Loan Summary

Here’s a table summarizing these two home loan programs:

Find a Trusted Lender Who Understands Your Financial Needs

Now that you understand the key features and advantages of the Texas Veterans Land Board loan vs VA loan, the next step is to talk to a knowledgeable loan officer for expert advice and guidance throughout the loan process.

Our loan officers at Texas United Mortgage are ready to compare your options and review the numbers with you.

Contact us now to start your application!