Difference Between Texas Vet Loan and VA Loan

Two Programs with Great Benefits for Veterans Living in Texas

Veterans and active duty military officials have two reliable financing options for home purchasing – the Texas Vet Program and the VA Loan Program. While both programs offer purchasers remarkable benefits and savings opportunities, you must compare the two and understand which option suits you.

Understanding the difference between a Texas Vet loan and a VA loan is vital for making an informed decision about purchasing a home. From interest rates and closing costs to the maximum loan amount and occupancy tenure, there are numerous comparison points to consider when choosing a feasible loan program for your house purchase.

To help you make a decision, take a look at our detailed guide by our experienced professional in Texas home financial matters. We provide this inclusive guide to help you choose the best loan option that guarantees maximum financial advantage.

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Texas Vet Loan and VA Loan Overview

Learn about the critical points of difference between Texas Vet loan and VA loan through this comprehensive chart. It helps you better understand the benefits and conveniences offered by both loan programs in Texas before choosing a financing option for your home.

Comparison Point	Texas Vet Loan	Federal VA Home Loan
Eligibility	Must be a Texas resident at time of mortgage application	No residency requirement
Lender Fees Allowed	1% origination fee, 1% participation fee Underwriting fees	Origination Fees, Lender Fees, Discount Points
Interest Rate	Changes weekly; 30%+ VA disability can affect rates	Changes daily; VA disability has no effect
Loan Amount	Max $766,550	No maximum limit
Occupancy	Must intend to occupy for 3 years	Must intend to occupy 12 months
Loan Type	Purchase only	Purchase and refinance allowed
Maximum Loans	One at a time	Multiple loans allowed
Private Mortgage Insurance (PMI)	This is not charged on a VA Texas Vet Loan however is charged on an FHA Texas Vet and Conventional Texas Vet Loan with less than 20% down	There is no PMI
Energy Requirements	Must have ENERGY STAR or HERS Index ≤ 75 for new home construction	No specific requirements
Funding Fee	Not required	Required as a one-time payment at the time of closing

Despite all the differences, you may wonder what the VA loan and Texas Veterans Land Board lending programs have in common. Let’s quickly examine the few standard features between the two loan programs.

No prepayment penalty
No MIP (Mortgage Insurance Premium) and Private Mortgage Insurance (PMI)
No requirement for a down payment
Veterans with any type of service-related disability of a percent (10-100%) do not have to pay the funding fee.
Competitive interest rates for both loan programs are more favorable than any conventional loan, which requires up to 20% down payment.
Both programs allow veterans to buy only a primary residence for them. The loan programs do not support the purchase of second homes or any investment properties.

Texas Vet Rate vs. VA Loan Rate 

The difference between a Texas Vet loan and a VA loan is mainly centered on interest rates, occupancy, fees, and other vital loan specifics. While the primary dissimilarity between the loan programs lies in their interest rate calculation, other factors that also make the two dissimilar are credit scores and rate lock terms. Let us walk you through the Texas Veterans Land Board vs. VA loan details that will help you choose your home financing option.

Interest Rate Adjustments

Texas Vet Loan Rates: The interest rates for Texas Vet Loans are adjusted weekly, with the new rates taking effect every Monday. This means that the rate you’re offered at the beginning of the week is the rate that will apply throughout that week, providing some stability in your rate shopping process.
Federal VA Loan Rates: In contrast, Federal VA loan rates can adjust daily based on market conditions. This fluctuation means that the rate can vary from one day to the next, which might affect your loan pricing over time.

Rate Lock Terms

Texas Vet Loans usually offer shorter rate lock terms. In this case, you have a limited period to lock in the preferred interest rate after initiating the loan process.
Federal VA Loans offer the buyer flexibility with longer rate lock periods. This is a favorable rate lock option because it allows you to secure a rate for your loan when market conditions are unstable.

Impact of Disability Ratings

Texas Vet Loans offers a discounted rate for veterans with a service-related disability rating of 30% or more. The discount rate cuts the interest by 0.5% from the initial offered rate, which assures significant savings over the lifetime of the loan.
Federal VA Loans do not offer a discounted rate for veterans based on any disability rating. Your disability rating of any type does not impact the offered interest rate.

Influence of Credit Scores

Texas Vet Loan Rates differ because the borrower’s credit score does not influence them. Therefore, veterans have access to competitive rates regardless of their credit histories.
Federal VA Loan Rates are usually influenced by the borrower’s credit score, which means anyone with a higher score can secure a lower interest rate. This implies that federal VA loan rates depend on the lender’s assessment of the risk associated with the loan.

Buying Down Rates

Texas Vet Loans does not offer a scope to buy down the rate below the decided weekly rate. This rule is necessary to maintain the loan program’s fairness and simplicity.
Federal VA Loans give borrowers flexibility, allowing them to pay discount points upfront for a lower interest rate. For this reason, it is an effective strategy for veterans looking forward to staying in their homes for longer to minimize their interest rates.

Comparing Features Between Texas Vet Loan and VA Loan </span

Features

Feature	Texas Vet Loan	Federal VA Loan
Rate Adjustment	Weekly on Monday	Daily
Rate Lock Term	Shorter term	Longer term
Disability Rate Impact	0.5% rate discount for 30%+ disability	No impact
Credit Score Impact	Not affected by credit score	Rates can be lower with higher credit scores
Buying Down Rate	Not allowed to buy down below the weekly rate	Allowed to buy down the rate

This comparison chart clearly explains the difference between a Texas vet loan and a VA loan and illuminates the benefits veterans receive from the programs. It will help you select the most feasible loan option that meets your homeownership goals and is compatible with your financial backdrop.

Difference Between Texas Vet Loan and VA Loan Closing Costs

When comparing Texas Vet loan vs. VA loan closing costs, it becomes clear that both loan programs are meant to help veterans in their home purchasing decisions. However, they have varying fees and expenses, directly impacting the overall cost of closing the loan. Take a look at critical points of closing cost comparisons.

Texas Vet Loan Closing Costs:

This may include a 1% origination fee.
Potentially includes a 1% participation fee.
Underwriting fees may apply.
Discount points are not allowed.
Closing costs may include extra fees like appraisal, title insurance, survey, and state recording fees.
Texas Vet Loans may have specific energy efficiency requirements that eventually impact closing costs based on the property.

VA Loan Closing Costs:

Typically, do not include an origination fee if the lender charges the VA’s 1% flat fee.
Generally includes lender fees such as processing and underwriting fees.
Discount points are negotiable, and veterans can pay for discount points to reduce their interest rate.
VA funding fees vary based on down payment and whether the borrower has used a Texas VA home loan before (exempt for disabled veterans).
Other closing costs may include appraisal and compliance inspections, recording fees, credit report and flood determination fees, survey, title insurance, and VA funding fees.

Apart from these differences between Texas vet loan and VA loan closing costs, both programs can face additional costs, including property taxes, prepaid interest, and homeowner’s insurance. Also, the actual closing costs differ with the lender, the location of the property, and other loan specifications. To get exact details of the closing costs of Texas Vet and VA loans, consulting with an experienced and dedicated loan officer is necessary.

Texas Veterans and VA Loan Closing Costs

Lender Charges	Texas Vet Loan	Federal VA Loan
Origination Fee	Up to 1% of the loan amount	Up to 1% of the loan amount
Participation Fee	Up to 1% of the loan amount	N/A
Discount Points	N/A Unable to buy down a Texas Vet Rate	Negotiable Used to reduce interest rate
VA Funding Fee	2.15% – 3.3% of the loan amount, can be financed; zero if the Veteran receives 10% or more disability.	2.15% – 3.3% of the loan amount, can be financed; zero if the Veteran receives 10% or more disability
All Other Fees including but not limited to Appraisal, Title, Credit Report, Inspections	Are not impacted by loan type.	Are not impacted by loan type.

Note: This table provides a general comparison of potential lender charges for Texas Vet Loans and Federal VA Loans, offering Texas veterans a clearer understanding of what to expect. It’s important to remember that actual charges can vary based on the specifics of the loan, the borrower’s circumstances, and changes in regulations. Veterans considering a VA loan in Texas are encouraged to consult with an experienced lender, like Shirley, who can provide personalized advice tailored to their unique situation, ensuring a comprehensive understanding of all associated costs.

VA Loan Rates

Interest

as Low As

1 %

APR**

as Low As

1 %

Down payment: 0% & Term: 15 & 30 Yr Fixed
Click HERE for important disclosures

Texas Vet Rates

Interest

as Low As

1 %

APR**

as Low As

1 %

Down payment: 0% & Term: 15, 20, 25 & 30 Yr Fixed
Click HERE for important disclosures

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