Find out about VA Loan Limits in Texas and how they can affect you.
If you are looking to buying a home and are an active service person or a veterans of the armed services, you need to know about the VA loan limits in Texas.
Any Veteran should investigate whether a loan from the U.S. Department of Veteran Affairs is the right fit. Like any home loan, it’s important that you consider the qualifications needed to apply for the loan. You also need to know whether VA loan limit cap how much you can borrow.
VA loans were developed to help guarantee homeownership for those who have served the country, as well as qualifying surviving spouses. The loans are available to purchase a new home, as well as to build, remodel, or refinance your current home.
The Department of Veteran Affairs has two primary loan types, VA backed loans and VA direct loans.
VA backed loans are managed by other VA-approved financial institutions. This is a promise that the government will help the lender recover some of their losses if you go into foreclosure. You can apply for a VA backed loan directly with a bank, credit union, or other approved lender.
VA direct loans are managed directly by the Department of Veteran Affairs. You will apply for and pay your loan directly to the VA.
VA Loan Benefits
A VA loan has two main benefits when compared to more traditional mortgage options.
One of the most substantial obstacles that stand in the way of buying a house for most potential buyers is saving up enough money for a down payment.
While the Federal Housing Administration FHA-backed loan program reduces down payments to as little as 3.5%, VA loans remove this obstacle all together by not requiring no down payment.
The second-largest benefit to the VA home loan program is that no mortgage insurance is required. Mortgage insurance provides extra security to the lender if you default on the loan before it’s paid in full. Removing this burden reduces the overall cost of the loan.
Most lenders require mortgage insurance on traditional mortgages if you put less than 20% as a down payment. USDA and FHA loans require mortgage insurance regardless of the size of the down payment.
Qualifying for the Loan
Loan qualifications for a VA mortgage are relaxed in comparison to more traditional mortgages. However, the VA does limit who can apply for the loans.
To qualify, you will need a Certificate of Eligibility (COE). You can apply for a COE directly online through the VA eBenefits website
To obtain a COE, you will need to prove that you both meet the service requirements as an active duty or veteran of the armed forces and that you were not dishonorably discharged.
The amount of service required may vary depending on the years you served.
Keep in mind that even with a COE, you will still need to meet the credit and financial worthiness requirements of the lender you choose to apply to for the loan.
However, these financial requirements tend to be looser due to the reduced risk on the lender.
VA Loan Limits In Texas
As of 2021, there are no VA loan limits as long as you have full entitlement.
You have full entitlement if you have never purchased a home using a VA loan, or you have completely paid off your previous loan and sold the property.
Understanding Your Budget In Place of VA Loan Limits
While the Department of Veteran Affairs may not limit the size of your loan, it’s important to plan your own limits of what size payments fit safely into your budget.
Your loan budget will vary depending on the median home prices for the area of Texas you want to live in.
How do you determine a loan budget?
One of the best places to start is an online mortgage calculator.
Many banks and financial organizations provide these online tools that automatically compare your income with your monthly debts and recommend home prices in Texas that you can afford.
Alternatively, you can calculate your own limits using the 28/36 rule.
28% represents the maximum of your monthly gross income you should spend on home-related expenses. 36% represents the maximum of your monthly gross you should spend on total debt, including your mortgage payments.