There are various kinds of VA loans in Texas (which could be under the VA-direct loan or VA-backed loan) aimed at satisfying all possible housing needs of veterans, active duty service members, surviving spouses of a veteran, and other military individuals. These loan programs are designed to help you build, buy, renovate a home or refinance your present VA home loan.
Today, we will share four major VA home loans in Texas, their functions, benefits, and what you need to be eligible for a VA loan. However, before we dive into these loan types, there are a few things you should know about the VA backed loan programs in Texas.
Introduction: What You Should Know about VA Loan Programs in Texas
The VA loan program was established in 1944 to provide eligible military members access to a quick and stress-free transition into life after years of military service. These loans can be accessed through a private mortgage lender or any private lenders, and they can be VA-direct loans or VA-backed loans, which the Department of Veterans Affairs essentially backs.
The guarantee provided by Veterans Affairs enables lenders to offer VA loans with more favorable conditions, such as no down payment and reduced interest rates, compared to conventional loan programs. A VA loan is regarded as low-risk by most lenders, thus opening unlimited options for eligible veterans to get excellent rates in their choice of loan.
The VA loan program enables veterans and active duty service members to purchase a primary residence with no money down and a VA funding fee that is typically lower than private mortgage insurance and based on several factors that you should compare to make sure you pick the product best for you at the time.
For instance, the VA funding fee is typically between 0.5% to 3.6% which applies to the loan amount not the price of home purchase. Also, 100% of disabled Veterans are completely exempt.
As a reputable lender headquartered in Texas, Security American Mortgage has help many veterans buy and build homes using a Texas VA loan. We have an excellent and proven history of serving veterans their earned Texas VA loan benefit through various VA home loan programs.
Here are some of the VA loan types you can obtain in Texas.
Texas VA Construction Loan
With a Texas VA construction loan program, you can become a homeowner by building a home without necessarily making a down payment. Qualified veterans can finance the buying of land and construction of their homes using a VA construction loan. Although, if you already own your land, the transaction is much easier, and you’ll have your land and the construction built into one va home loan in a permanent one time close.
As a private lender, we offer these loans with a $0 down payment, as the VA guarantees a percentage in default cases. However, borrowers must meet certain requirements, such as credit score and possess the Certificate of Eligibility (COE), before they are considered.
Benefits of Construction Loans
The benefits of obtaining a VA construction home loan include the following:
● No reserve requirements.
● Much relaxed underwriting requirements compared to a conventional loan.
● Save money by eliminating every expense involved in a second closing
● No need for re-qualification once the home construction is completed
● Locked in and competitive interest rates
● Eliminates the need to worry about payment during construction
● Lesser credit rating (as low as 620) based on several factors to be determined upon application and underwriting.
Requirements for VA Construction Loans
To qualify for a VA construction home loan, you will be required to meet all necessary VA loan eligibility requirements and other additional regulations. The basic requirement includes:
● Locating an insured and licensed VA-approved builder.
● Complete documentation of the construction plans.
● Home construction plan appraisal.
● Any other additional documentation is required by your lender.
● VA funding fee
Texas VA Jumbo Loans
The VA jumbo loan is another VA-backed loan that exceeds the loan limits of conforming loans. It is often referred to as a non-conforming type of VA home loan. Although VA loans typically have no limits, the borrower’s credit is usually considered, and risk evaluated when approving mortgages. VA lenders usually refuse loans termed to be highly risky. A VA jumbo loan will require the Veteran to put something down but likely much less down than the alternative Conventional Jumbo loan program.
A VA jumbo loan in Texas exceeds the conforming limits of $647,200 with a maximum of $4,000,000. Basically, the minimum loan amount after which a loan is considered jumbo and the maximum loan amount for a VA jumbo loan is considered when determining if a loan is jumbo.
Existing VA jumbo loans can also be refinanced with a VA Interest Rate Reduction Refinance Loan (IRRRL), and this is especially beneficial as you acquire more equity in your home and when the loan amount becomes conforming.
Benefits of Jumbo Loans
VA jumbo loans are beneficial to eligible homebuyers in the following ways:
● Borrowers who meet certain criteria can purchase more expensive homes with less stringent credit and down payment requirements.
● Private mortgage insurance (PMI) is not required for VA jumbo loans.
● There are no prepayment penalties with a VA home loan.
Requirements for Jumbo Loans
The general property and appraisal requirements for VA jumbo loans include the following:
● The home must be used as a primary residence.
● The residence must pass basic safety and soundness inspections, including termite inspection.
● A VA jumbo loan requires a minimum credit score of 640.
● Debt-to-income ratio (DTI), which compares the minimum monthly payments on your installmental debts vis-a-vis your monthly income.
Texas VA One-Time Construction Loans
A VA one-time construction loan is a loan designed to assist veterans in purchasing land and building their own homes. A VA construction loan requires no down payment and allows you to finance the entire cost when applicable.
The VA One-Time Close (OTC) loan program provides all-in-one financing for construction-to-permanent loans. OTC loans, available for manufactured, modular, and stick-built homes, allow borrowers to finance home construction, lot purchase/land payoff, and permanent mortgages with a single closing.
Our One-Time Close Construction Loan Program includes Conventional, FHA, VA, and USDA programs to simplify the financing process for new home buyers. In addition, Veterans who own their land have a much easier time obtaining a one-time close construction loan. Owning land improves your VA loan file and increases your ability to qualify when bringing equity to the table.
Benefits of VA One-Time Construction Loans
The benefits of VA One-Time Close loan consist of the following:
● 100% financing is available.
● It combines land, construction, and a mortgage in a single loan.
● Enhances faster loan process, especially for Vets who own their land. Owning land eliminates the need to search for land before getting your loan approved. Hence you can easily make plans and get your loan approved for construction faster.
● Eliminates the risk of qualification loss during construction.
● Construction interest and loan soft costs are rolled into the loan.
● There will be no payments made during the construction period.
Requirements of VA One-Time Construction Loans
● A certificate of eligibility is required, which you can obtain by submitting your statement of service.
● You must have a credit score of 620 or higher.
● You will require the services of a VA-licensed and approved builder.
● A DTI (debt-to-income ratio) of at least 40-55% is required.
● Your blueprints and construction plans must be submitted.
● You must conduct a property appraisal.
Native American Direct Loan (NADL) Program
A Native American Direct Loan (NADL) is available if you are a Veteran and a Native American or a Veteran with a Native American spouse. This native American direct loan is a type of VA home loan that enables veterans to purchase, construct, renovate, or carry out home improvements on federal trust land, which is typically a Native American reservation. Native Americans can also use a NADL to refinance a home.
Other Types of VA Loans in Texas
VA-Backed Purchase Loan
A VA-backed purchase loan typically requires zero down payment, lesser interest rates, and closing costs compared to those issued to non-veteran consumers, and there is no penalty for paying it off early. Eligible veterans, qualified survivors, and service members no longer have limits on loans over $144,000, which means there are no down payment required and the ministry of veteran affairs guarantee payment up to 25% for a loan default above $144,00.
Despite the fact that the loan can be obtained without a down payment, individuals on a VA-backed purchase loan do not need to obtain private mortgage insurance (PMI), which lowers the monthly payment. These loans can be used to purchase, construct, or renovate a home, even one with up to four units.
There are various types of VA loans in Texas, each tailored to a specific type of borrower. You can apply for the kind of Texas VA loan providing you with VA home loan benefit that is best suited for your home goals (buying, building, renovating, refinancing, etc.) and financial situation.