If you’re considering building a house in Texas, you might assume you’ll need a traditional mortgage or a construction loan. However, if you’re a veteran or active duty military member, you could qualify for a Texas Veteran Land Loan, a unique program that allows Texas-based armed forces members and retirees to own real estate.
The helpful guide below outlines what you should know about this program, including its benefits and requirements.
About the Texas Veteran Land Loan
The Texas Veteran Land Loan is a state-exclusive program that helps veterans in the state borrow up to $150,000 to buy land. The loan terms come with competitive interest rates and a minimum 5% down payment if you purchase at least one acre.
The program is relatively straightforward and easily accessible to Texas veterans and military personnel. Many people can close on their land purchase within 30 days, which is quick in comparison to traditional mortgages. The program is efficient, thanks to customer feedback and administration funding that comes from applying a small fee on every loan.
Texas Veteran Land Loan Eligibility Requirements
Though the Veteran Land Loan program makes owning land in Texas more accessible to veterans and active duty military members, it doesn’t mean everyone is eligible for the loan. You must meet these requirements to qualify:
- Be 18 years old or older
- Be a legal Texas resident on the date of your application
- Meet one of these service criteria
- Be active duty military personnel
- Be a Texas National Guard Member
- Be a reserve component military member with at least 20 years of
- service to qualify for retirement
- Be a veteran with a minimum of 90 active duty days unless you have an honorable discharge within that period for a service-related disability
- Be a surviving spouse of a veteran with a service-related death or an official missing-in-action listing
- You can be a member of either of the country’s five military branches to be eligible for the Texas Veterans Land Loan, including the Army, Air Force, Marines, Navy, or National Guard.
Also, you don’t have to be a long-standing Texas resident to qualify for the loan. In previous years, military members had to begin their service in the state to be eligible. With current guidelines, you can be a military member or retiree who lives in Texas for at least one day with plans to stay and still qualify.
Land Requirements for the Veterans Loan
If you qualify for this type of land loan in Texas, the land you want to buy has to meet certain thresholds. Despite making it easier for people to own land in the state, not all land will qualify for financing through the Texas Veterans Land Board, which governs the loan program.
For example, any land you want to finance has to be completely within the state of Texas. The land might border another state, but no part of the land can be within a neighboring state.
The land also has to be at least one acre, not including any area under a dedicated public road or waterway. Still, your prospective land must have access to a usable public road that’s at least 60 feet wide or within your county’s public road width requirements.
Other land requirements include:
- Not being within a zone solely for commercial use
- Having a complete copy of the recorded subdivision lot or a field note description with the official seal and signature of the surveyor
- Removing all debris, trash, and run-down structures from the premises before closing
- Not have previous ownership by you or your spouse within the last three years
Requirements for Land Loan Financing
The current Texas Veteran Land Loan interest rate is 6.95%. However, that isn’t a fixed rate, so it can change at any time.
You can expect to have the administration review your credit report before you can receive financing for your land purchase through this loan program. Credit approval is a requirement, so it helps to have a low debt-to-income ratio and a good credit score.
The land loan will only cover up to $150,000 in tract financing. You would have to put down at least 5% of the purchase cost upfront. The loan terms include a fixed rate for 30 years and a $325 appraisal fee when you submit your loan application.
There’s no limit to how often you can use a Texas Veterans Land Loan. As long as you pay off your original loan, you can apply for another one.
Texas’s Land Loan Process for Veterans
If you meet the eligibility requirements and are ready to start the land-buying process, you’ll need to complete your loan application and provide the Veterans Land Board with a Farm & Ranch Contract and land survey and field notes. You’ll also need to provide proof of income and pay the appraisal and contract fee before the administration reviews your documents and prepares the land closing.
Who Owns the Property After Closing?
When the Texas Veterans Land Board began issuing loans to Texas veterans in 1949, the loan amount was only $10,000, and borrowers had 40-year loan terms. Back then, the State of Texas held ownership of all lands that people bought through financing through the Veterans Land Loan program. It wasn’t until borrowers paid off their loans that the land ownership shifted to them.
Thankfully, the program administrators changed how things work for the betterment of Texas veterans. The loan terms and amounts are different, and you can own your new land outright as soon as their real estate deals close. However, the State of Texas holds the land’s first lien until you pay your loan.
Any type of loan you get to buy land has its own benefits and stipulations. Yet, as a veteran or active duty military member living in Texas, you can make your land ownership dreams more accessible with a Texas Veteran Land Loan. The program is the only one like it in the country, giving Texas military personnel loans of up to $150,000 to purchase at least one acre of land in the state.
If you want to learn more and find someone who is dedicated to guiding you through on your oath to owning land, give me a call! Shirley Mueller has been able to help thousands of veterans with VA Loans and has helped Veterans in almost every possible circumstance including active-duty personnel deployed overseas, returning home, or with PCS orders. She regularly helps separated Veterans who may have income that includes Military retirement, disability, and social security. And she frequently helps spouses of Veterans who find themselves handling the home purchase or VA loan refinance for their family.
