When most veterans are ready to settle down and become homeowners in Texas, the barrier is usually the need to start saving for a down payment. This is where a VA loan comes to your aid.
Table of Contents
In this article, we will discuss the benefits of VA loans, VA loan eligibility requirements, financial and property requirements, and processes for first-time home buyers. You will also learn about special considerations for first-time homebuyers in Texas.
VA Loans First Time Home Buyers Texas Eligibility Requirements
Service Requirements: Active Duty, Veterans, National Guard, and Reserves
The service requirements for VA home loan eligibility in Texas include :
- American veteran
- Active service member
- A member of the U.S. military service
- National Guard members
- Reservists
- Surviving spouses who are unmarried.
Minimum Service Requirements
The minimum length of service to be eligible for a VA home loan as a veteran or active duty service member is 90 days of active service without a break (during a period of war) or 181 days of active service without a break (during a period of peace).
As a National Guard or reservist, you should have served for 6 years and been honorably discharged.
Discharge Status and Eligibility
To be honorably discharged, you must have been discharged for one of the following conditions::
- Hardship
- A disability affecting your service
- The need to reduce force members
- Critical medical conditions
- Government conveniences
If your discharge is not considered honorable, you may not be eligible to enjoy the benefits of a VA loan
Certificate of Eligibility (CoE)
A VA Certificate of Eligibility is the proof of your eligibility for a VA loan. Eligible members, including surviving spouses who meet the service and eligibility requirements, can obtain a CoE.
Financial Requirements for VA Loans in Texas
Credit Score Requirements
The minimum credit score for a VA loan in Texas is generally 620, although some lenders may go lower. However, a higher credit score could be required if you are seeking a loan for more than a million dollars.
Debt-to-income Ratio (Dti)
41% is considered an ideal DTI for VA loans. Some private lenders may require a lower percentage because the lower the percentage, the better. DTI is also capable of affecting your VA loan eligibility because it’s the amount of your total earnings that goes towards debt.
Residual Income
Unlike the DTI, there’s no specific figure you need to have as residual income to be approved for a VA loan. Your lender and the loan amount you’re requesting are the major factors affecting your residual income requirement. A residual income is what you have left to yourself after your monthly payment and other expenses have been deducted.
VA Loan Benefits for First-Time Homebuyers in Texas
No down payment required: Unlike conventional loans, the VA loan doesn’t require a down payment of a certain percentage of the home purchase price.
No Private Mortgage Insurance (PMI): Private Mortgage Insurance is required for borrowers whose down payments are below 20% and to protect lenders if the borrower fails to make the payments. PMI is not required for VA loans.
Competitive interest rates: Since the Veteran Affairs Department guarantees about 25% of your loan amount, lenders often offer favorable terms.
Flexible credit guidelines: With VA backing, lenders tend to be less strict with their guidelines, especially with first-time home buyers.
Assumable mortgages: If you decide to sell a home you acquired with a VA loan, a buyer can assume the mortgage, and you get back the equity you have in the house..
No prepayment penalties: Lenders may charge a penalty for paying off a mortgage earlier than the agreed terms. This is not the case with a VA loan.
Property Requirements for VA Loans
In order to be sure the home you intend to buy is worth backing by the Department of Veterans Affairs, the property needs to meet certain VA property requirements.
Minimum Property Requirements (MPRS)
The minimum property requirements are in place to ensure buyers get safe, well-structured, and neat properties. Properties that do not meet MPRs interfere with the progress of your VA loan.
Appraisal and Inspection Process
The purpose of a property appraisal is to evaluate and determine whether the property is marketable and worth financing. VA appraisers evaluate the property’s value and how accurately it conforms to the VA MPRs.
The inspection process, on the other hand, does not interfere with the mortgage process but is highly recommended to obtain a full picture of the property and to identify potential future problems.
Property Eligibility
The following MPRs establish a property’s eligibility:
- A marketable residential property
- An appropriately roofed property
- Proper water supply and cleanliness
- Walls free of mold
- Proper drainage systems
- A large living space
- A healthy and non-infectious environment
- Year-round accessibility to pedestrians and vehicles
- Working electrical wiring
- All encroachments must be reported and settled.
The VA Loan Process in Texas
1. Finding a VA-approved lender: It is always best to work with a VA-approved lender to make your loan process easier because they are already familiar with VA mortgage processes.
2. Getting pre-qualified: Lenders usually issue a pre-qualification letter after they review your application documents and are satisfied with your financial situation.
3. Submitting a loan application: Before you submit your loan application, you must have found a home with the help of a real estate agent and agreed on an offer with the owner. You will then complete an application with your lender.
4. Underwriting and appraisal: Underwriting is an in-depth review of your financial condition, including your credit history. The VA lender will also order an appraisal.
5. Closing on your VA loan: Once your purchase is approved, you will sign all your paperwork and pay closing costs. The property will then be transferred to you.
Special Considerations for First-Time Homebuyers in Texas
Texas veterans land board Housing assistance program
The Texas Veterans Land Board Housing Assistance Program (VLB) was created in 1983 to help veterans buy homes and improve their homes through the Veterans Home Improvement Program (VHIP). The VLB allows reservists and National Guards members to defer interest on payments when called for active duty.
Property tax exemptions for disabled veterans
In Texas, veterans who are confirmed 100% disabled are exempt from all property taxes.
First-time homebuyer education courses
Buying a home for the first time is considered a major achievement, and the process can be overwhelming. That’s why VA loan first-time buyers in Texas can benefit from educational courses designed to guide them through the process.
Common Questions and Misconceptions About VA Loans
Despite the benefits VA loans offer, their processes can seem unclear to many people. This has also led to certain misconceptions that could be misleading. Let’s take a look at some of them.
Can I Use My VA Loan Benefit Multiple Times?
Yes! You can use your VA loan benefits as many times as you need to. As long as you remain eligible, you can always apply for other loans.
Is There a Maximum Loan Amount for VA Loans in Texas?
Texas uses the standard VA loan limit. The maximum amount is $766,550 but could be higher in high-cost areas.
Can I Use a VA Loan to Buy a Second Home or Investment Property?
The answer is yes, but it will not be as easy as first. This is because VA loans are primarily designed to help active-duty service members buy a house they intend to stay in as permanent residents.
Conclusion
VA home loans are open to veterans, active-duty military members, reservists, National Guard members, and even qualified surviving spouses. These loans offer potential benefits like lower monthly payments due to favorable interest rates and VA guarantees.
Also, you can enjoy special considerations as a Veteran in Texas with the VLB program, access to first-time homebuyer education courses, and a tax exemption for disabled veterans. It’s always advisable to work with a VA lender. District lending can help you secure one easily!
With District Lending, you will have access to over 50 VA lenders, allowing you to choose one conveniently. They can also work with you to be your trusted partner in buying a home. District Lending is your ideal mortgage firm!
