Texas VA Loan
Find who qualifies for the unique Houston VA Loan, and the pros and cons of a VA loan in Texas.
Veterans, active service members, and eligible spouses can apply for a Texas VA loan.
If you are looking for a home in Houston, you can purchase the perfect home for your family with a Houston VA loan.
VA loans are backed by Veterans Affairs and are designed to serve the men and women who served our country. If you are a member of the military, here’s what you can expect if you purchase a home with a VA loan in Texas.
VA Loans and How They Work
Texas VA home loans are provided by private lenders but backed by Veterans Affairs, enabling the lender to provide more favorable terms such as lower interest rates and no down payment.
The VA loan program was created in 1944 as part of the GI Bill. Eligible military members can apply for this home loan to ease their transition back into life after their military service.
This type of loan requires no down payment from the borrower. The government guarantees these loans.
VA loans are considered low-risk by lenders, so you can still get an excellent rate on your mortgage. Many institutions offer VA loans, so eligible borrowers aren’t limited in their choice of lenders.
Are You Eligible for a Texas VA Loan?
You may be eligible for a VA home loan if:
- You’re an active-duty service member or a veteran
- You’re a qualified spouse of a deceased service member or prisoner of war
In order to qualify for any home loan, you must also meet your lender’s credit and income requirements.
The Pros and Cons of Texas VA Loans
No Down Payment Required
Texas VA loans are easily accessible for veterans because they require no down payment. Over half of all houses purchased with a VA mortgage were bought without a down payment.
Unlimited Borrowing, Limited Liability
Unlike traditional and FHA loans, VA loans have no borrowing limit. However, the VA will only back 25% of your loan.
No Mortgage Insurance and No Minimum Credit Score
Private mortgage insurance (PMI) can tack hundreds of dollars onto your monthly payment. So, if you buy a house in Houston with a VA loan, you are not required to purchase PMI.
There is also no minimum credit requirement, but lenders may decline your loan application if your score is below 620.
You Can Pay It Off Early
There is no prepayment penalty on a VA loan. If you pay off your first home or want to move, you’ll be able to apply for another VA mortgage.
Even those who aren’t in an ideal financial situation can apply for a VA home loan. If you filed for bankruptcy, you can apply for a VA mortgage in just two years.
Although you don’t have to purchase private mortgage insurance on a VA loan, you will have to pay a funding fee. This fee can add several thousand unexpected dollars to your monthly payment and increase the amount of interest you will pay.
You can’t use a VA loan to buy investment properties, and all homes must be approved by the lender.
VA Loan Requirements
To qualify for a VA loan, you must meet one of the following requirements.
You are an active member of the United States military.
You are an honorably discharged veteran with 90 days of wartime active service or 181 days of peacetime active service. Make sure you have the proper documentation.
You served over six years in the Selective Reserve or National Guard. Your deceased spouse was a service member who died while serving.
In order to apply for the loan, you will have to fill out a Certificate of Eligibility form.
Texas VA Loan Limits
There is no limit on how much you can borrow with a VA home loan in Texas. However, the VA will only guarantee, 25% of your loan.
The amount your lender will approve will depend on your financial history, down payment, and credit score.
Are VA Loans Better Than Conventional Loans?
While VA loans are easier to qualify for, they don’t offer as much flexibility as traditional loans.
Service members who don’t have the financial chops needed to get a conventional home loan can use the VA loan to purchase their house.
If you are in good financial standing, a conventional home loan may save you money because you won’t have to pay for funding fees and private mortgage insurance if your down payment is at least 20%.
You should choose the loan and the lender that offers the best interest rate and lowest fees when you are searching for a home in Texas.
If you have the financial ability to take out a conventional loan, it’s best to leave government-insured mortgages alone. Avoid high interest rates and pricey mortgage insurance by opting for a conventional loan.