United States veterans in all States may apply for financial assistance to purchase a home via the Federal VA Loan Program. In Texas, however, veterans have a second option as well. They can also apply for loan assistance provided by the Texas Vet Program.
Veterans and/or veterans’ surviving spouses who want to purchase homes in Texas, must take the time to ask all the questions they may have beforehand. They must get as much information as possible about both programs, enabling them to make the correct financial decision.
What Is the Basic Purpose of Both Programs?
The purpose of both programs is to put systems in place allowing private enterprise to assist veterans and their families in owning their own homes at affordable terms.
Federal VA Loan Program
The US Department of Veteran Affairs provides home loan guarantees to banks, mortgage companies and other private lenders, allowing them to offer loans with very favorable rates and terms to veterans for buying, building, repairing, retaining, or adapting their homes.
Eligible veterans and surviving spouses in any American State can make use of the Federal VA Loan Program.
Texas Vet Program
The Texas Vet Program, however, is available exclusively in Texas. Many Texas veterans have already purchased homes with the assistance of the Veterans Housing Assistance Program (Texas Vet Program.) It is one of the programs accommodated by the Texas Veterans Land Board (VLB.) The program makes it possible to obtain low-interest loans with little or no upfront money.
What Are Some Important Similarities Between the Two Programs?
The following are some of the similarities you will find in the Federal VA Loan Program and the Texas Vet Program:
- No prepayment penalty is applicable.
- There is no requirement for a down payment.
- Both programs offer interest rates that are more favorable than those of conventional loans.
- No mortgage insurance is required).
- The loan programs do not support the purchase of more than one home.
- Muslim veterans may seek and use Sharia-compliant financial institutions if they want to. Some financial institutions in the U.S. offer Riba type of products, though they may be not so common.
What Are Some Important Differences Between the Texas Vet Loan and the VA Loan Programs?
It is more important for Texas veterans looking for affordable home loans to look at the difference between Texas Vet Loans and VA Loans than the similarities. The differences will help you determine which program will be the best for your circumstances.
Occupancy
It is important to know that to apply for a Texas Vet Loan you must be residing in Texas when you start the application process. The home must also be your primary Texas residence. You must also have the intention to occupy the house for at least 3 years after the loan has been approved.
For a Federal VA Loan, you don’t have to be a Texas resident when you apply for assistance to buy a home in Texas, but in whatever State you are residing, the VA Loan Program requires that you must have the intention to occupy the house for at least 12 months after receipt of the loan.
Loan Amount and Interest Rates
A Federal VA Loan has no maximum loan limit you can apply for, while the maximum amount that can be allocated to you via the Texas Vet Program is $766,550. The VA Loan’s interest rate changes daily, while the Texas Vet’s rate changes weekly.
VA Disability
VA disability may be taken into consideration when the interest rate is calculated in the Texas Vet Program. Disability has no influence on the rates of the Federal VA Home Loans.
Loans: Number and Type
A veteran can only have one Texas Vet Loan at a time but may have multiple Federal VA Loans simultaneously. Purchasing and refinancing are allowed by the Federal VA program, but the Texas Vet Program only allows the purchasing aspect of a house with the loan.
However, in 1986 the Texas Veterans Land Board (VLB) also introduced a separate program for qualified Texas veterans to apply for affordable loans to be used for home repairs to their existing homes.
Interestingly, Texas is the only US State where veterans also have the opportunity to borrow money to purchase land at favorable interest rates and terms.
Conclusion
If you are a Texas veteran or the surviving spouse, you have an option to either apply for a home loan via the Texas Vet Loan Program, or the Federal VA Loan Program. Your specific circumstances and financial situation will to a great extent dictate which Program to use.
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This page was last updated on September 2, 2024.
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