The Texas Veterans Home Loan I Didn’t Know About Until I Became a Realtor

Updated 12/28/17; Originally published 3/13/16

Takeaways

• If you are a Texas veteran, compare the Tex Vet loan to your other options
• If you have 30% VA disability or greater, the Tex Vet loan is probably your best mortgage option, bar none
• It is not separate from the VA loan, rather you use it on top of the VA (or other type) loan

The Tex Vet loan is worth looking into if you are a Texas resident and military veteran or service member.

Incredibly, I’m a Texan who bought five homes while active duty in the Army – one each time I PCSed or returned from a deployment.  And yet I did not know anything about the Tex Vet loan until I left the Army and became a Realtor.  I have no idea if or what I might have saved on my home if I had known about it at the time.  And very few clients I’ve worked with are aware of it, either.  The reason, I believe, is that most lenders are NOT Tex Vet eligible, and therefore don’t advertise the program.

The Tex Vet program is run by the Veteran Land Board, part of the Land Office. It is not a loan type, per se.  Rather, it can be used in conjunction with another loan type (most often the VA loan).  The difference between using Tex Vet and just a VA loan is that Tex Vet rates are set weekly by the VLB, not the market.  Depending on current rates, Tex Vet may be more appealing.  Also, the Tex Vet program has major benefits for former service members with at least 30% service-related disability.

Benefits

• Low rates often competitive or superior to standalone VA loan rates.
• 0.5% rate decrease for service members with a minimum 30% disability or surviving spouses.
• High energy efficiency requirements for new homes that builders must meet.

Costs

• 1% mandatory funding fee + 0-1% additional fee depending on the lender which can be rolled into the loan.
• Possibly additional energy efficient features like heat pumps if the seller can’t be negotiated to pay for it.

Eligibility

• At least 18 years old
• Legal resident of Texas on the date of application
• Must work through a Texas VLB approved lender.
• One (1) of the following:

1. Active Duty Military
2. Member of the Texas National Guard
3. Reserve Component military member with 20 qualifying years for retirement
4. Veteran having served at least 90 active duty days unless discharged sooner due to service-connected disability and not discharged dishonorably
5. A surviving spouse of a Veteran listed as missing in action or whose death was service connected

Home Restrictions

• Must be the veteran’s primary residence in Texas
• Home must be a single family attached or detached home, townhome or condominium
• Duplexes or other multi-family units must have been constructed at least five years prior to the closing date of the loan
• New homes to have either ENERGY STAR certification or HERS Index score of 75 or less
• The home must remain as the veteran’s primary residence for at least three years, and the Veteran borrower must occupy the home within 60 days after loan closing.
• Program will only loan on homes up to $417,000.  Homes above that amount (rare in the Fort Hood area) can still utilize the VA and Tex Vet loan programs, but will require a down payment.

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FAQ:

What is the difference between Tex Vet and a VA loan?

The Tex Vet loan is not a separate loan program, but one that can be used with a VA loan, or any other qualifying loan type like FHA or Conventional.  The Tex Vet loan rate is set by the Texas Veterans Land Board, while VA loan rates are set by lenders in compliance with VA guidelines.  Often the Tex Vet loan will.

Can I refinance an existing loan into a Tex Vet?
No.

What if I am PCSed, deployed or ETS prior to occupying the home three years?
Generally, PCS, deployment and ETS orders are acceptable exceptions to the three-year occupancy requirement.

What about property tax exemptions for Veterans with a disability, and surviving spouses?
The Tex Vet benefits above are separate from Texas property tax benefits, which you would also receive if eligible.

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Tex Vet Lenders

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