Military members and their families get a big financial break when buying a home using the VA home loan benefit. But did you know that certain states offer home loans to veterans that rival the VA mortgage program?
These veteran loans are not available in all states, but those that do offer them provide their military communities some very important financial help.
Home Loans For Veterans: Some Basics
VA mortgage loan options for veterans include the ability to buy, build, repair, or refinance a home with lower costs than conventional mortgages.
That means that state veteran loan options have a lot to live up to. VA mortgages typically feature no down payment, plus reduced risk to the lender thanks to the VA guarantee of a portion of the loan.
Veterans who receive or are eligible to receive VA compensation for service-related medical issues have an added bonus when using a VA mortgage–they don’t have to pay the VA loan funding fee if their status is on the record at closing time. Those who have to wait may apply for a refund, but such refunds are NOT automatic.
VA loans require occupancy; you can’t buy an investment property with a VA mortgage. The same rules will apply for these state-level home loan programs aimed at veterans; you can’t buy a home you don’t intend to occupy as your home address with a government backed loan.
Military members do get exceptions for service requirements, so that is not a worry. Instead, the home loan rules for this type of loan are aimed at those who would buy a home but not live in it.
Two Different State Veteran Loan Programs
There are two notable state programs that help veterans who want to buy a home. Those programs are located in California and Texas. They are known, respectively, as CalVet loans and TexVet loans.
This article focuses on the TexVet program, you can learn about the CalVet loans program from our CalVet article.
TexVet Loans: Multiple Options For Veterans
There are multiple home buying and land buying programs for Texas veterans; collectively they are referred to as TexVet or TexVet loans.
These programs should not be confused with the operations of the similarly-named TexVet.com, which is a website described as “…the state clearinghouse for trusted information, resources, data, technical support, and research relevant to service members, veterans, their families, and those who serve them.”
Administered via the Veterans Land Board of Texas (VLB), these home buying and land buying programs include:
- Veterans Housing Assistance Program offers help to eligible Texas Veterans in purchasing a home. These loans feature “little or no down payment” according to the official site.
- Veterans Land Loan Program allows qualifying Texas veterans to purchase land at lower interest rates.
The Veterans Housing Assistance Program
The Texas State Legislature created the VLB Veterans Housing Assistance Program (VHAP) to aid Texas Veterans in purchasing a home.
The program’s history stretches back to the 1980s; currently serving military members and eligible Texas veterans can apply to buy a home with lower interest rates (the official site refers to them as “competitive”) and “little to no down payment.” Terms at the time of this writing include:
- Loans for up to $510,400
- Fixed-rate mortgages
- Loan terms between 15 to 30 years
- Veterans with VA-rated service connected disabilities 30% or higher are offered bigger interest rate breaks
VLB Requirements
To qualify for a VLB loan, the property must be purchased as a dwelling – a primary residence and not an investment property or occasional occupancy home. The home must be physically located in the state of Texas. Additional requirements include the following:
- The home must be a single family home (detached or not), townhome, or condominium
- Duplexes and multi-family units must have been constructed at least five years prior to the loan’s closing date
- New homes must have either ENERGY STAR certification or a HERS Index score of 75 or lower
- The home must remain the Veteran or Military Member’s primary residence for at least three years
- The borrower must occupy the home within 60 days after loan closing
There are some things to consider with these types of loans compared to VA mortgages. One big factor is the ability to refinance. VLB loans cannot be used to refinance other mortgages, nor can VLB loans be used as a down payment loan.
Who Qualifies For VLB Loans
The Texas Veterans Land Board official site lists the following qualifications for those who want to apply. All borrowers must be:
- At least 18 years old
- A legal resident of Texas on the date of application
- Must be a military member, qualifying surviving spouse, or veteran
The criteria for active duty, veterans, and surviving spouses include the requirement that the applicant be one of the following:
- Active duty military
- Texas National Guard
- Reserve component member with 20 qualifying years for retirement
- A Veteran having served at least 90 active duty days unless discharged sooner due to a service-connected disability
- A veteran without a Dishonorable Discharge
- A surviving spouse of a Veteran listed as missing in action
- A surviving spouse of a veteran or military member whose death was service-connected
Veterans Land Loan Program
The Texas Veteran Land Board (VLB) administers a land program designed to help currently serving military, veterans, and qualifying surviving spouses the ability to buy land using loans with “competitive interest rates” and low down payment requirements (five percent down for an acre or more).
The VLB official site claims the VLB Land Loan Program is the “only one of its kind in the nation,” and qualified borrowers can apply for up to $150,000 to purchase land.
Features of these loans include:
- Loans up to $150,000 for land purchases
- Fixed 30-year interest rate
- No prepayment penalty
- Resources to view listings of VLB land for sale to the public
Who Qualifies For A VLB Land Loan Program
Similar to the Veterans Housing Assistance program, all borrowers must be:
- At least 18 years old
- A legal resident of Texas on the date of application
- Must be a military member, qualifying surviving spouse, or veteran
Active duty, veterans, and surviving spouses must be one of the following:
- Active duty military
- Texas National Guard
- Reserve component member with 20 qualifying years for retirement
- A Veteran having served at least 90 active duty days unless discharged sooner due to a service-connected disability
- A veteran without a Dishonorable Discharge
- A surviving spouse of a Veteran listed as missing in action
- A surviving spouse of a veteran or military member whose death was service-connected
Land Requirements
The land you purchase with a VLB Land Loan must meet certain requirements. They include:
- The entire tract of land must be within the state of Texas.
- Size must be one acre minimum. This excludes “any portion beneath a dedicated public roadway or navigable waterway or subject to frequent inundation” or is considered “otherwise unusable.”
- Have legal, usable access to a public road. Access must be a minimum of 60 feet wide or meet the county public road width requirements, whichever is greater.
- Not be zoned for commercial use only.
- Not have been owned by you or your spouse within the previous three years.
- No value is given to any improvements on tracts.
- Multiple, contiguous tracts may be combined under one “financing instrument.” When doing so, each share must be no smaller than 60 linear feet of common boundary or tracts are adjacent to one another. Other requirements in this area may apply.
In some cases a borrower may know they wish to buy land but don’t have a specific parcel in mind. In these cases you can use the official site to review VLB land for sale available to the public. You can also do a property search, or call the VLB for assistance at 1-800-252-8387.
Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter for Air Force Television News
