The Pros and Cons of Texas VA Loans

Texas VA Loans offer unique advantages for military borrowers, but they also have limitations. Understanding these helps veterans make informed decisions:

Pros

• $0 Down Payment: Finance up to $1.5M with no money down (vs. 3-20% for conventional loans).

• No PMI: Save $100-$300/month compared to FHA or conventional mortgages.

• Lower Rates: Average 0.25%-0.5% below conventional rates (5.75% vs. 6.25% in 2024).

• Flexible Credit: Minimum 580 credit score (vs. 620+ for conventional).

• Texas Tax Exemptions: Disabled veterans qualify for 100% property tax relief.

Cons

• Funding Fee: 1.25%-3.3% of loan amount (waived for disabled veterans).

• Home Eligibility: Must meet VA’s Minimum Property Requirements (MPRs).

• Occupancy Rule: Must use as primary residence (no investment properties).

VA Loan Requirements for 2025

To qualify for a Texas VA Loan in 2025, borrowers must meet these criteria:

Eligibility

• Service: 90+ consecutive days active duty, 6+ years Guard/Reserve, or spouse of MIA/POW.

• COE: Valid Certificate of Eligibility (we retrieve this for you).

• Texas Residency: No requirement—open to out-of-state buyers relocating to TX.

Financial Requirements

• Credit Score: Minimum 580 (recommended 620+ for competitive rates).

• DTI Ratio: Max 41% (exceptions up to 60% with compensating factors).

• Residual Income: Must meet VA’s county-specific thresholds (e.g., $1,200/month for family of 4 in Dallas).

Property Rules

• Primary Residence Only: No rentals/investments.

• MPRs: Homes must pass VA appraisal for safety/structural soundness.

Texas VA Loan Limits

Unlike conventional loans, VA loans in Texas have no maximum loan amount—but counties set “entitlement” thresholds:

2025 VA Entitlement (Texas)

Key Notes

• $0 Down Up to Limit: Borrow above baseline with 25% down on excess.

• Jumbo Loans: Finance luxury homes in Austin/Dallas with VA jumbo options.

• Multi-Unit Properties: Up to 4 units allowed if you occupy one.

Are VA Loans Better Than Conventional Loans?

For Texas veterans, VA loans typically outperform conventional loans in 5 key areas:

Advantages of VA Loans

• ✅ Lower Costs: No down payment + no PMI = $15,000-$50,000 saved upfront.

• ✅ Easier Qualification: 580 credit score vs. 620-740 for conventional.

• ✅ Foreclosure Protection: VA offers forbearance and repayment plans conventional lenders don’t.

• ✅ Assumability: Buyers can take over your VA loan (conventional loans rarely allow this).

When Conventional Wins

• ❌ Investment Properties: Conventional allows rentals; VA requires occupancy.

• ❌ High-Balance Loans: Over $1.5M, conventional may offer better terms.

• ❌ Non-Military Buyers: VA exclusivity limits eligibility.

Texas Veteran Example Scenario

A San Antonio veteran buying a $400,000 home:

• VA Loan: $0 down, 5.75% rate, $0 PMI → $2,334/month

• Conventional Loan: 10% down ($40,000), 6.25% rate, $150 PMI → $2,641/month
  *Savings: $307/month + $40,000 upfront preserved.

Texas-Specific VA Loan Benefits

Texas offers unique advantages for veterans using VA loans that amplify federal benefits:

• Property Tax Exemptions: Disabled veterans receive 100% property tax relief (Texas Tax Code §11.22)

• Homestead Cap: 10% annual appraisal increase limit protects against tax spikes

• Veteran Land Loans: TDHCA programs offer 30-year fixed rates for land purchases

• No State Income Tax: Extra savings on mortgage payments
  *Example: A disabled veteran in San Antonio saves $8,200/year on a $300,000 home through tax exemptions.*

How to Apply for Texas VA Loans (5-Step Process)

Herring Bank streamlines VA loan applications for Texas veterans:

1. Get Pre-Qualified: Call 1-214-225-3166 (1-minute eligibility check)

2. Gather Documents:

   • DD-214 or current orders

   • 2 most recent pay stubs

   • 2 years tax returns

3. Property Selection: We’ll verify VA eligibility for Texas homes

4. VA Appraisal: Fast-tracked with Texas-certified inspectors

5. Closing: Average 28 days with our in-house underwriting

Pro Tip: Texas veterans can reuse their Certificate of Eligibility (COE) for multiple purchases.

Texas VA Loan FAQs

Q: Can I buy a ranch with a VA loan in Texas?
A: Yes! VA loans cover properties up to 100 acres with a residential dwelling.

Q: Are VA loans good for Houston flood zones?
A: Absolutely. We help navigate FEMA requirements and insurance.

Q: What if I’ve used my VA loan before?
A: Texas veterans retain full entitlement – reuse it unlimited times.

Q: Do VA loans work for Texas mobile homes?
A: Yes, if permanently affixed and meet VA MPRs.