Difference Between Texas Vet Loan and VA Loan – When it comes to financing a home in Texas, veterans have access to two exceptional programs: the Texas Vet Loan and the VA Loan. While both options offer outstanding benefits to those who have served our country, there are important distinctions between the two. In this article, we’ll explore the key differences between the Texas Vet Loan and VA Loan, helping veterans make the most informed decision possible when choosing the right home financing option.
What Is a VA Loan?
The VA Loan, backed by the U.S. Department of Veterans Affairs, is a powerful mortgage program available to eligible veterans, active-duty service members, National Guard members, and certain surviving spouses. It offers a government-guaranteed home loan with no down payment, competitive interest rates, and no private mortgage insurance (PMI) requirements.
Core Features of a VA Loan
- Zero down payment required in most cases
- No PMI
- Competitive interest rates
- Flexible credit requirements
- Available for purchase, refinance, and construction
- Can be used nationwide, not just in Texas
What Is a Texas Vet Loan?
The Texas Vet Loan Program, administered by the Texas Veterans Land Board (VLB), is a state-specific mortgage program for veterans residing in Texas. It’s designed to provide additional benefits exclusively for Texas veterans, often in combination with a VA Loan or other financing.
Core Features of a Texas Vet Loan
- Exclusively for Texas veterans
- Fixed interest rate loans
- Can be used in conjunction with VA loans
- Rate discounts available for disabled veterans
- Offered only through participating lenders
- Limited to primary residence purchases within Texas
Eligibility Comparison
VA Loan Eligibility
- Active-duty service members with at least 90 continuous days of service
- Veterans who meet minimum service requirements
- National Guard/Reserve members with six years of service or 90 days under Title 10 orders
- Surviving spouses of service members who died in service or from service-connected disabilities
Texas Vet Loan Eligibility
- Must be a Texas resident
- Served at least 90 days of active duty, unless discharged due to a service-connected disability
- Honorable discharge required
- Must live in the home as primary residence
- National Guard and Reservists also eligible
- VA Certificate of Eligibility (COE) still required for VLB loans used in combination with VA loans
Loan Program Administration
The VA Loan is a federal program, administered by the Department of Veterans Affairs. It sets nationwide standards and guidelines, and it is implemented through VA-approved private lenders.
The Texas Vet Loan, on the other hand, is administered by the Texas Veterans Land Board, a state-level agency. It partners with local Texas lenders to offer financing options specifically for Texas residents.
Interest Rates and Loan Terms
VA Loan Interest Rates
- Rates vary by lender
- Market-based, but usually lower than conventional loans
- No cap on interest rates set by the VA
- Term options: 15, 20, or 30 years
Texas Vet Loan Interest Rates
- Set weekly by the Texas Veterans Land Board
- Typically below market average
- Further discounted interest rate available for veterans with 30% or more service-connected disability
- Fixed-rate only
- 15- or 30-year terms
Note: You can use your VA entitlement and still obtain a Texas Vet Loan with lower rates.
Loan Usage and Property Types
VA Loan
- Can be used to purchase, build, or refinance a home
- Also applicable to multi-unit properties (up to 4 units, if the veteran occupies one unit)
- May be used more than once (restored entitlement)
- Includes cash-out refinance and IRRRL (Interest Rate Reduction Refinance Loan)
Texas Vet Loan
- Only applicable for home purchases and refinance of existing Texas Vet loans
- No cash-out refinance option
- Property must be located within Texas
- Must be used for primary residence only
- Land and home improvement loans available separately through VLB
Difference Between Texas Vet Loan and VA Loan: At a Glance
| Feature | VA Loan | Texas Vet Loan |
|---|---|---|
| Backed By | U.S. Department of Veterans Affairs | Texas Veterans Land Board |
| Down Payment | Not Required | Not Required |
| PMI | Not Required | Not Required |
| Interest Rates | Vary by lender | Set weekly, often lower |
| Discounted Rates for Disabled Vets | No | Yes (≥30% disability) |
| Eligibility | Nationwide | Texas residents only |
| Property Location | Anywhere in the U.S. | Texas only |
| Usage | Purchase, Build, Refinance | Purchase, Refinance (within VLB) |
| Lender Selection | Any VA-approved lender | VLB-approved lenders in Texas |
| Land/Home Improvement Loans | No | Yes, through VLB |
Combining the Texas Vet Loan with a VA Loan
One of the most powerful aspects of the Texas Vet Loan program is that it can be paired with a VA Loan. When used together, veterans get the flexibility and benefits of a VA Loan, plus the lower interest rates from the Texas Vet Loan program.
How It Works:
- Apply for a VA Loan through a VLB-participating lender
- The lender submits your loan under the VLB guidelines
- The VLB sets the interest rate and backs the loan under the Texas Vet Program
- You get a VA-backed loan with state-level benefits and potentially lower rates
Which Loan Should You Choose?
It depends on your personal situation. If you’re a Texas veteran buying a home in Texas, and you meet the eligibility criteria, the Texas Vet Loan combined with a VA Loan may offer the most cost-effective option, especially if you qualify for discounted interest rates.
If you’re:
- Buying outside of Texas
- Needing more flexible property types
- Wanting to use cash-out refinancing
…then a VA Loan alone might be the better option.
Additional Programs Through the Texas Veterans Land Board
Beyond just home loans, the Texas Veterans Land Board offers:
- Land Loans up to $150,000 for at least one acre in Texas
- Home Improvement Loans up to $50,000
- Veterans Homes and Cemeteries programs for Texas veterans and their families
These options are exclusive to Texas veterans, and further demonstrate the state’s commitment to those who served.
Conclusion
Understanding the difference between Texas Vet Loan and VA Loan is crucial for any veteran seeking the best mortgage option in Texas. While the VA Loan provides flexibility, zero down payment, and national availability, the Texas Vet Loan enhances those benefits with state-level interest rate reductions, especially for disabled veterans.
By analyzing your needs, location, eligibility, and long-term goals, you can choose the loan that maximizes your benefits and minimizes your costs. We encourage all Texas veterans to explore both programs and consult with a VLB-participating lender for personalized advice.
