The Veterans Administration provides low cost financing options for veterans looking to buy or build a home. If you are looking to better understand VA loans Texas, how they work, and who is eligible, read on to learn more about this special mortgage program for veterans.
What is a VA Loan?
A VA loan is a special home loan for military service members and military veterans. Veterans must secure a VA loan through a traditional lender, however a portion of the VA loan is guaranteed by the Veterans Administration. So these loans are different from typical mortgage notes.
VA loans can be used to:
- Buy a home
- Build a home
- Refinance an existing VA mortgage
VA loans used to build or buy a home are called Purchase Loans. Veterans who already have a VA loan on an existing home and wish to refinance can apply for an Interest Rate Reduction Refinance Loan (IRRRL). A Purchase Loan is generally intended to be used once, however some veterans who do not use the full amount they were eligible for can put the remaining amount towards the purchase of a future home.
What are the advantages of a VA loan?
Because the Veterans Administration guarantees a portion of the loan, the lender can offer better loan terms to the customer. These loans allows families to purchase a home:
- With little or no down payment
- Without having to purchase private mortgage insurance
- With a competitive interest rate and favorable loan terms
The VA loan allows veterans to shorten the time of paying costly rent since they don’t have to save for the down payment (traditionally 20 percent of the purchase price, although sometimes as low as 3 to 5 percent), and therefore cannot qualify or delays the ability to qualify for a traditional mortgage.
Who is eligible for a VA loan?
Most veterans (and some surviving spouses) are eligible for a VA loan. Veterans must meet one of the following criteria for military service, or they must be a surviving spouse of a service member killed in the line of duty:
- 181 days of peacetime active duty service
- 91 days of wartime active duty service
- 6 years of reserves or national guard service
VA loan applicants must also provide evidence of a good credit score, sufficient income for the purchase price of the home, and a valid Certificate of Eligibility (COE) showing their qualifying military service. We obtain this certificate for you during the application process. We now have even more information regarding VA loan eligibility on our website.
Are there any limits on the VA loan amount?
Yes, and these limits are based on median home values as estimated by the Federal Housing Administration.
In Texas, a veteran with full entitlement may borrow up to $417,000 without a down payment. To increase this amount, the veteran would need to pay a percentage (25%) of the difference between the sales price and $417,000. This amount would be considered a down payment on the home, and is usually significantly smaller than a traditional down payment.
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I look forward to assisting you purchase or refinance your home!