Depending on your eligibility, you can secure a VA home loan in Texas if you’re a veteran, active service member, or surviving spouses with the help of the U.S. Department of Veterans Affairs. And because the VA can insure up to one quarter of your full loan amount, lenders like OVM Financial can provide you with an array of benefits not always available with conventional mortgage loans:
- Zero down payment
- Competitive interest rates
- No monthly mortgage insurance requirements
- Seller-paid closing costs and concessions
To get you started, we’ve outlined some basic VA loan requirements in Texas.
Applying for a Certificate of Eligibility
To start the loan application process, you must apply for a Certificate of Eligibility (COE) from the VA. We can also take care of the COE application on your behalf. This document specifies your entitlement, or VA-approved funds, to your mortgage company. Keep in mind you’ll also need to meet your lender’s credit and income requirements as well.
Understanding VA loan down payment requirements in Texas
One great benefit of VA home loans is that there’s the option of a 0% down payment. Your COE spells out what you can borrow without having to put further money down. However, if you have remaining entitlement, you may have to make a down payment if 25% of your home’s price exceeds your remaining entitlement.
Keep in mind, we can help you obtain your COE, and we will help you determine the status of your entitlement. If you’d like to learn more about how we determine full versus remaining entitlement, read on below.
Understanding full versus remaining entitlement
If the VA awards you full entitlement, you’ll enjoy no down payment, and the VA will guarantee 25% of your full loan amount. However, your lender will look at your income, credit history, debt-to-income ratio, current employment, and your home’s appraised value to determine what you can borrow.
To qualify for full entitlement, you must meet the following requirements:
- You haven’t previously used your VA home loan benefits.
- You’ve paid back any previous VA home loans.
- You completely repaid a VA loan following a foreclosure or short sale.
You may have remaining entitlement, or unused funds from a previous entitlement, if you meet one of the following stipulations:
- You have a VA loan you’re still paying off.
- You’ve paid off your home loan and still own that home.
- You defaulted on a previous VA loan.
Remaining entitlement doesn’t limit the VA amount for which you can qualify; however, you must make a down payment if you exceed your remaining entitlement. You can calculate your remaining entitlement by subtracting your original entitlement from what you’ve used previously. Here’s an example:
If you purchased a home for $300,000 but need to buy another home elsewhere, you’ll have to secure a new home with your remaining entitlement. The amount of entitlement you’ve already used is 25% of your current loan amount—$75,000. Since the Texas VA loan limit is $647,200, the total amount the VA will insure is $161,800, or 25% of $647,200. This means you have a total remaining entitlement of $86,800—the difference between $161,800 and $75,000.
If you’re interested in purchasing a home, reach out to an OVM Financial expert. We’ll answer any questions you have about VA home loan requirements in Texas. You can also start your application online, or access more articles about VA loan guidelines like the process of assuming a VA loan after death.
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