The Texas Veterans Housing Assistance Program (VHAP) is a lender-originated program for Texas veterans purchasing a primary, owner-occupied residence in Texas. This program gives eligible Texas Veterans a reduced interest rate if they are already approved for financing through a participating lender, such as our company. That approval can be for a VA, FHA, or Conventional loan. The current maximum loan amount for the Texas Vet loan is $510,400 and minimum credit score is 620. A Conventional Texas Vet loan will require a down payment of at least 10%, but for VA and FHA, simply follow the guidelines for those programs. (In other words, if you have no down payment on your VA loan, then it would be the same if you add the Texas Vet program.)
This program is especially beneficial for Texas veterans with a compensable VA disability rated at 30% or greater by the Department of Veterans Affairs. If eligible, they receive an additional interest rate discount of 0.50% off the base interest rate set by the Texas Veterans Land Board (TVLB). The base interest rate for this program is calculated by the TVLB and released to the public after business hours every Friday for the upcoming week and can be higher or lower than the market rate for a VA loan. There are just a couple of "catches" to the Texas Vet Housing Assistance Program. First, you must agree to keep the house as your primary residence for at least 3 years. You can always refinance or sell your home at any time, but they want to discourage using the program and then turning the property into a rental in the first 3 years. If you do so, the Land Board could potentially call your note due.
Another thing to consider is that there can be an additional cost for the Texas Vet program. It is called a "Texas Vet Participation Fee" and it can be up to 1% of the total loan amount, in addition to an origination fee and other lender fees, if applicable. Depending on the size of your loan, this fee may be reduced by your lender. Sometimes the lower rate on the program is worth the additional cost and sometimes it’s not. It just depends on where the rates are at the time you are locking and we will run that analysis for you when you get to that point in the process.
One of the HUGE upsides to the Texas Vet program is for those currently serving in the Reserves or National Guard. If you have a Texas Vet Housing Assistance loan and you are "activated" specifically for the WAR ON TERROR, the interest on your Texas Vet loan may temporarily be waived, so that all you need to pay on a monthly basis is principal and your escrows. That could easily save you $500 or more per month!
The first step in obtaining a VHAP loan is to get pre-approved for a VA, FHA, or Conventional loan with a Texas VLB participating lender. Once you are pre-approved, we will request certification for your VHAP eligibility. We always process the VHAP application on behalf of our clients. (NOTE: The veteran must be living in Texas at the time of the VHAP application.) We obviously cannot tell you everything we know about Texas Vet loans on a single page of our website, but we invite you to give us a call or drop us an email and find out how this wonderful program may benefit you and your family.