VA Loans
THE BENEFIT YOU ALREADY EARNED
No down payment and no monthly mortgage insurance — two things no other mainstream loan program offers together. If you served, this is almost always the loan worth pricing first, and it is the one most often left unused.
Start Here
What the VA Guaranty Actually Does
The Department of Veterans Affairs doesn’t lend money. The loan comes from an ordinary lender, the same as any other mortgage. What the VA does is guarantee a portion of it — a promise to cover part of the lender’s loss if the loan ever defaults.
That guaranty is doing the work a down payment normally does. On a conventional or FHA loan, your cash in the deal is what protects the lender against a fall in value. Here the government’s backing stands in its place, which is why no down payment is required and why there is no monthly mortgage insurance to buy. It isn’t a loophole. It’s the benefit, functioning as designed.
One consequence worth knowing up front: the guaranty is finite and personal. It’s called your entitlement, it belongs to you rather than to a property, and it can be used more than once over a lifetime.
The Benefits
Where the Money Actually Shows Up
Most program comparisons stop at the down payment. On a VA loan the larger saving is usually the one that repeats every month for as long as you hold the loan.
No down payment
Full financing is available up to your entitlement. On a conventional loan the same purchase would generally want 5%; on FHA, 3.5%. That is cash that stays in your account instead of the closing table.
You can still put money down if you want to — and doing so lowers the funding fee, which is covered below.
No monthly mortgage insurance
This is the one people underestimate. A conventional loan under 20% down carries PMI until you reach 80% equity. An FHA loan under 10% down carries mortgage insurance for the life of the loan. A VA loan carries neither, from day one.
Over the years you actually keep a mortgage, this line usually outweighs a modest difference in interest rate.
- The seller can pay your closing costs. VA permits a seller to cover the buyer’s closing costs, plus concessions of up to 4% of the value on top. In the right negotiation this is what gets a veteran into a home with almost nothing out of pocket.
- The loan is assumable, and the benefit is reusable. A qualified buyer can take over your VA loan at your interest rate — if you close low and rates later rise, that becomes a selling point attached to your house. And this is not a once-in-a-lifetime card: entitlement is restored when a prior VA loan is paid off.
Eligibility
Who Qualifies
Eligibility rests on service, and it reaches further than most people assume — you do not need to have served in combat, and you do not need to be retired from the military.
Service requirements, in general terms
Broadly: 90 continuous days of active duty during wartime, 181 days during peacetime, or six years in the National Guard or Reserves — with shorter paths in some circumstances, including discharge for a service-connected disability. Character of discharge matters. The exact rules turn on when and how you served, which is precisely why the paperwork below exists rather than a checklist on a webpage.
The Certificate of Eligibility
The COE is the VA’s confirmation that you’re entitled to the benefit and how much entitlement you have available. It is not a credit approval and it costs nothing. Chet can usually pull it electronically in minutes with your service information — and it is worth doing early, because it’s the document that tells you whether a full-entitlement, no-limit loan is on the table.
Surviving spouses
An unmarried surviving spouse of a service member who died in the line of duty, or from a service-connected disability, is generally eligible in their own right — and is typically exempt from the funding fee as well. This is one of the most commonly missed benefits in the entire program, and it costs nothing to check.
The Funding Fee
The One Real Cost — and Who Doesn’t Pay It
There is no monthly mortgage insurance on a VA loan, but there is a one-time funding fee. It goes to the VA, not to the lender, and it’s what keeps the program running without drawing on taxpayer money. It can be paid at closing or financed into the loan, which is what most borrowers choose.
The rate depends on two things only: how much you put down, and whether you’ve used the benefit before.
| Down payment | First use | Used before |
|---|---|---|
| Less than 5% | 2.15% | 3.30% |
| 5% to 9.99% | 1.50% | 1.50% |
| 10% or more | 1.25% | 1.25% |
Note what the table shows: if you’ve used the benefit before, putting down 5% cuts the fee from 3.30% to 1.50%. On a repeat use that is often the single largest lever available to you. A streamline refinance of an existing VA loan carries a much lower fee of 0.50%.
Many veterans pay no funding fee at all — and don’t know it
- A service-connected disability rating of 10% or higher — exempt. Ten percent is the threshold, and going above it changes nothing: a 10% rating and a 100% rating both waive the fee entirely.
- Entitled to that compensation but receiving retirement or active-duty pay instead — also exempt. This one gets missed constantly.
- A Purple Heart recipient serving on active duty — exempt, whatever the disability rating.
- A surviving spouse receiving Dependency and Indemnity Compensation — exempt.
If your claim is still pending at closing, you pay the fee. There is no way to defer it. But if the VA later approves the rating with an effective date on or before your closing date, you can apply for a full refund. On a typical purchase that is thousands of dollars, so tell Chet early if a claim is in progress — timing the closing is sometimes possible, and knowing to go back for the refund always is.
Loan Limits
There Is No VA Loan Limit — If Your Entitlement Is Full
This is the most out-of-date belief still circulating about VA loans, and it costs people real money. Since 2020, a veteran with full entitlement has no VA-imposed loan limit at all. You are not capped at the conforming limit. What you can borrow is decided by what you can repay and what the property appraises for — the ordinary way.
Limits do still apply in one situation: when your entitlement is partly used or was reduced — typically because you already have a VA loan outstanding, or a previous one ended in a claim against the guaranty. In that case the county limit governs how much guaranty is left, and a down payment may be required to bridge the gap. Your Certificate of Eligibility is what tells you which case you’re in.
Buying above the conventional conforming limit?
With full entitlement, a VA loan can go there without becoming a jumbo loan — no jumbo credit and reserve requirements, and still no monthly mortgage insurance. It is worth pricing both before assuming a large purchase means a jumbo.
Qualifying
What VA Underwriting Looks At
Credit — no VA minimum, but lender floors are real
The VA sets no minimum credit score. Individual lenders do, usually somewhere in the 580 to 620 range, and they vary considerably. That variation is the single best argument for working through a broker on a VA loan: a score that one lender declines, another will write.
A thin credit file is workable too. VA is more accommodating than most programs about borrowers who simply haven’t borrowed much.
Residual income — the test unique to VA
Beyond the usual debt-to-income calculation, VA asks a question no other program asks: after the mortgage, taxes, insurance, debts and estimated utilities are paid, how much is actually left over each month? The required amount varies by region and household size.
It’s a common-sense test, and it is widely credited with why VA loans have historically performed so well. It can also allow a higher debt ratio than you might expect when the leftover figure is comfortable.
- You have to live there. VA is a primary-residence program — no second homes, no pure rental property. One to four units is fine as long as you occupy one of them.
- The appraisal does double duty. A VA-assigned appraiser establishes value and confirms the home meets VA’s Minimum Property Requirements — safe, structurally sound, sanitary. The result comes back as a Notice of Value.
- A termite report is effectively standard in Texas. The whole state sits in a moderate-to-heavy infestation zone, so a wood-destroying insect report is generally required on a VA purchase here. Since a 2022 rule change you are allowed to pay for it yourself — for years the veteran could not, and the cost had to fall to the seller. The VA still encourages negotiating it with the seller, but being able to offer to cover it can make your offer easier to accept.
Local Detail
What Texas Veterans Should Know
- A disability rating can do two things at once. It waives the VA funding fee, and separately it earns you a Texas property tax exemption on your homestead. Those are two different benefits from two different governments, and the second one is set out in full below.
- There is no VA cash-out refinance in Texas. Under the Texas Constitution, a cash-out refinance against your homestead has to be a conventional loan — VA and FHA are not eligible. A VA streamline refinance to lower your rate is fine, since it isn’t cash-out. If tapping equity later is part of the plan, that’s worth knowing now rather than in five years.
- Property standards versus Hill Country housing stock. VA’s minimum requirements are less rigid than FHA’s, but a well, a septic system or a long-serving roof still gets looked at. On acreage, raise it before you’re under contract.
- Budget from the full payment. With no mortgage insurance in the picture, escrow becomes a larger share of what you pay each month. Texas property taxes and insurance are collected alongside principal and interest, so the all-in number runs well above what a payment calculator suggests.
- File your homestead exemption after closing on your primary residence. It reduces taxable value and caps how fast assessments can climb. Free, and not automatic.
Texas Disabled Veteran Property Tax Exemption
Two Very Different Benefits, Depending on the Rating
This one is worth reading carefully, because the word “exemption” is doing two completely different jobs in the table below. Under a 100% rating it means what you would hope. Below that, it means something much smaller.
| Disability rating | What you get |
|---|---|
| 10% – 29% | $5,000 off the assessed value |
| 30% – 49% | $7,500 off the assessed value |
| 50% – 69% | $10,000 off the assessed value |
| 70% – 99% | $12,000 off the assessed value |
| 100%, or Individual Unemployability | Total exemption — no property tax on the homestead |
- Read the partial tiers correctly. Those are reductions in the property’s taxable value, not in your tax bill. Taking $12,000 off the assessed value of a $400,000 home saves a modest amount each year — real, worth claiming, but measured in a couple of hundred dollars rather than a couple of thousand.
- The 100% tier is a different order of thing entirely. A total exemption on your residence homestead removes the property tax line from your monthly payment altogether. In a state with no income tax and correspondingly high property tax rates, that transforms what a given payment can buy — and it is the single most important number to establish before you start looking at houses.
- Age 65 and over. A disabled veteran who is 65 or older with a rating of at least 10% generally qualifies for the $12,000 exemption regardless of the exact percentage. Relevant to a great many people around Kerrville.
- Surviving spouses. A qualifying surviving spouse can continue the total exemption. It does not necessarily end with the veteran.
- You have to apply for it. None of this is automatic. The application goes to your county appraisal district with your VA documentation — a separate filing from the general homestead exemption, and both are worth doing.
Chet served too
U.S. Army — a tour of duty in Turkey, then Sandia Base in Albuquerque, honorably discharged. It is part of why VA loans get his full attention rather than being treated as a side program, and why the questions he asks a veteran client tend to be the right ones.
If This Isn’t Quite Your Situation
Other Programs Worth a Look
Conventional Loans
Not eligible for VA, or buying a second home or rental? Conventional covers ground the government-backed programs don’t.
Learn More →FHA Loans
Without VA eligibility, FHA is usually the most forgiving route on credit and debt ratios.
Learn More →USDA Loans
Another zero-down option, for eligible rural and suburban properties, if VA isn’t available to you.
Learn More →VA Loan Questions
What credit score do I need for a VA loan?
Is there really no down payment?
Do I have to pay the VA funding fee?
Is there a limit on how much I can borrow?
Can I use a VA loan more than once?
What is residual income?
Can I get a VA cash-out refinance in Texas?
What property tax exemption do disabled veterans get in Texas?
Can I buy a duplex or a fourplex?
Chet’s full Mortgage FAQs page covers credit, closing costs, appraisals and what to expect at every step.
Let’s Find Your Entitlement
Chet can pull your Certificate of Eligibility and show you what the benefit is worth. No cost, no obligation.
