By Chad Bowman, Veterans United Home Loans
The VA Loan is a powerful home loan program for many veterans, service members and military families. Thanks to a guaranty backed by the Department of Veterans Affairs (VA), qualifying veterans and service members can access a zero-down-payment home loan and finance 100 percent of the price of their new home. The VA Loan also gives them the ability to obtain lower interest rates, which can potentially help them qualify more easily for a VA Loan than for other loan programs. The VA Loan also saves homebuyers thousands of dollars over the life of the loan by not paying private mortgage insurance (PMI). Both active duty and retired veterans can access this home buying benefit.
One improvement as recent as this month is an increase in the Texas loan limit for VA loans without a down payment. The limit went from $417,000 to $424,100. Veterans who have full entitlement and who qualify can get a VA loan for $424,100 with no down payment. Financing more than $424,100 requires a down payment of only 25 percent of the amount over the $424,100 limit. In that case, it would be a VA “jumbo loan” which goes up to $1.5MM.
Veterans can even have more than one VA Loan at a time! Although VA Loans are only for a primary residence at the time of purchase, a veteran can move out later and lease out the home as an investment property while still keeping the VA Loan. If they have enough remaining “second tier entitlement,” they can purchase another home with their VA benefits. Even a veteran who had a VA foreclosure in the past and who owes money to the VA can potentially obtain another VA Loan without paying back the VA for the previous foreclosure loss.
There are additional benefits for disabled veterans and surviving spouses. For instance, a veteran with a 10 percent or more VA disability rating will not pay any VA funding fee when he or she obtains a VA loan. This will save him or her thousands of dollars. Veterans with a 30 percent disability rating may take advantage of the Texas Veterans Housing Assistance Program to get a potentially below‐market interest rate. And veterans with a 100 percent VA disability rating are completely exempt from property taxes on their homestead residence.
There are also VA loans for refinancing. In Texas there are two VA programs available. The first is the VA Streamline Refinance (also called “IRRRL”) used to refinance from a VA Loan to another VA Loan. It usually requires no out‐of‐pocket expenses, appraisal or income verification. The other is the VA Cash-Out Refinance used to pay off a non‐VA loan. In Texas this program cannot be used to pull out actual cash, but it can be used to replace another loan program with a VA Loan to capture a lower interest rate, a shorter term or to remove mortgage insurance.
If a VA Loan is used to purchase a home, it must be the veteran’s primary residence. Just about any home can be purchased, but condos must be on the VA-approved list. Only specialized lenders can finance a manufactured, mobile or modular home. There is not currently a VA program for land or for construction; therefore, these properties likely require a conventional loan financing option, although the Veterans Land Board has a great land‐only program.
Do you know a veteran who is hesitant to apply for a VA Loan because he or she is concerned about credit scores or credit history? Many local Austin lenders offer complimentary credit repair assistance programs to help those veterans overcome that hurdle and get into their dream home. It’s usually just a matter of time, patience and doing the right things to bring scores up. The sooner they start working on it, the better.
The best place to look for information and training about these programs is your local VA lender and local board of REALTORS. Both the Austin Board of REALTORS and the Williamson County Association of REALTORS have classes on VA loans and Texas Veteran loans. The more you know, the more you can be a resource to local military veterans and really make a difference in their lives.
Remember, the VA loan benefit is not just a loan product. It is an entitlement service members have earned by their sacrifice to protect our freedom. Veterans turn to local REALTORS to guide them in the home buying process. Give back by supporting our local veterans and share this valuable VA benefit information with those who fought to earn it.
Chad Bowman, Branch Manager, NMLS #191475. Veterans United Home Loans is a VA approved lender; Not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency. NMLS # 1907 (nmlsconsumeraccess.org). Licensed by the Texas Department of Savings and Mortgage Lending, Mortgage Company License #1907; 77193 Servicer License – Corporate (Missouri) Office:Texas-SML Residential Mortgage Loan Servicer Registration #1907. Equal Opportunity Lender. (512) 646-0800. VeteransUnitedAustin.com. 3415 Greystone Drive, Suite 301, Austin, TX 78731.