VA Loans in Texas

What’s different about VA loans in Texas

Texas has one of the largest veteran populations in the country, and Shirley’s office is in Austin. Texas also has some of the most unusual mortgage rules in the country: a constitution that limits cash-out loans, community-property underwriting, high local property taxes and no state income tax. Here is how each one changes a VA loan.

Property taxes: the number that matters most in Texas

Texas has no state income tax, so schools, counties and cities are funded by local property taxes, and they are a large part of every Texas mortgage payment. Three things lower them:

• Homestead exemption. Once the home is your primary residence, file with your county appraisal district. Voters raised the school-district homestead exemption to $140,000 in November 2025.
• Disabled-veteran exemption. Veterans rated 100% disabled, or paid at the 100% rate for individual unemployability, pay no property tax on their homestead. Partial ratings get a fixed exemption: $5,000 (10–29%), $7,500 (30–49%), $10,000 (50–69%) or $12,000 (70% and up, or age 65+ with at least a 10% rating). Unremarried surviving spouses can qualify too.
• MUD and PID taxes. Many new neighborhoods around Austin, Houston, San Antonio and Dallas–Fort Worth sit in a municipal utility district (MUD) or public improvement district (PID) that adds to the tax rate. Ask for the total tax rate, not just the county rate, before you compare homes.

Tell Shirley your disability rating up front so your payment estimate uses the tax number you will actually pay.

Texas is a community-property state

If you are married, VA requires your spouse’s debts to be counted when you qualify, even if your spouse is not on the loan. A credit report is pulled for them, and their monthly payments are included in your ratios. Their income is not counted unless they are on the loan.

Texas homestead law also requires your spouse to sign the deed of trust at closing, even if they are not a borrower. Plan for both of you to be at closing, or arrange a power of attorney early if one of you is deployed.

Texas Veterans Land Board programs

The Texas Veterans Land Board (VLB) runs state programs that can work alongside your federal VA benefit:

• Veterans Housing Assistance Program (VHAP): home loans up to $832,750 (effective January 5, 2026) through VLB participating lenders. It can be paired with a VA loan for $0 down, and veterans rated 30% or more get a reduced interest rate.
• Veterans Land Loan Program: land loans up to $200,000, or $275,000 for a dual-spouse loan (effective February 9, 2026), for one acre or more with 5% down.

The VLB rate is not always the best deal once it is compared side by side with a regular VA loan. Ask Shirley to price both.

Texas closing costs

Texas has no state mortgage tax or transfer tax. The biggest closing-cost items are title insurance and escrow fees. Title insurance premiums in Texas are set by the Texas Department of Insurance, so the base premium is the same at every title company; escrow and other fees still vary. A survey is often required, and an existing survey from the seller can sometimes be reused.

Building a home in Texas

• Builder. Texas has no statewide license for home builders, so experience and track record matter most. Some cities require builders to register, and VA no longer requires a builder ID.
• Homestead rules. Texas protects homesteads from liens, so the lien for building a home must come from a written contract signed before work starts, by you and your spouse. The loan documents and builder contract are set up to meet this; it is one reason the paperwork must be signed in the right order.
• Foundations. Expansive clay soils are common across much of Texas, so expect an engineered foundation plan and soil report as part of the build.
• Land you already own. If you bought land first, including with a VLB land loan, the construction loan can generally pay off the land loan at closing so you end up with one mortgage. Bring your land payoff to the first call.
• New neighborhoods. Many new-build lots are in a MUD or PID, which adds to your property tax rate. That affects your payment and what you qualify for, so it is worth checking before you choose a lot.

Cash-out refinancing in Texas: Section 50(a)(6)

Any refinance that puts cash in your pocket on a Texas homestead is a Texas home equity loan under Section 50(a)(6) of the Texas Constitution, and the state rules apply on top of VA’s:

• All loans on the home combined can’t exceed 80% of its value (VA alone would allow up to 100%).
• Most lender fees are capped at 2% of the loan amount (appraisal, survey and title costs are excluded from the cap).
• The loan can’t close until 12 days after you apply and receive the Texas home equity notice.
• You get the final closing-cost itemization at least one business day before closing.
• Closing must be at the lender’s, a title company’s or an attorney’s office.
• You have 3 days after closing to cancel without penalty.
• Only one home equity loan per 12 months.

A VA refinance that takes no cash out, such as an IRRRL or a no-cash refinance of a non-VA loan, is generally not a 50(a)(6) loan and isn’t limited to 80%, unless the loan being paid off is itself a Texas home equity loan. If you need more than 80% of your value in Texas, that is the path to ask about.

If your current loan was a Texas cash-out

A Texas home equity (50(a)(6)) loan keeps its home-equity status when refinanced unless it is converted under Section 50(f)(2). That requires at least one year since the cash-out closed, no new cash, a loan of no more than 80% of the home’s value and a disclosure given in advance. If your current VA loan was a cash-out, tell Shirley at the start; it decides which refinance is possible.

Buying a home in Texas

• The contract. The standard Texas contract’s financing addendum includes VA’s required clause: if the VA appraisal comes in below the price, you are not obligated to buy or lose your earnest money.
• Option period. Texas contracts usually include a paid option period to inspect and walk away. Use it for your home inspection and to get insurance quotes.
• Termite inspection. VA generally requires a wood-destroying insect report on Texas homes. The seller can pay for it.
• Taxes at closing. Texas property taxes are paid once a year, in arrears, so expect a tax proration credit from the seller at closing and an initial escrow deposit.

Assuming a VA loan in Texas

Markets near Fort Cavazos, Fort Bliss and Joint Base San Antonio have many VA-financed homes, so assumable listings are more common there. Because Texas has no transfer tax, assumption closing costs are mostly title and escrow. If you borrow to cover the equity gap, that second loan is part of the purchase, which Texas homestead law allows; it is not a home equity loan.

Renovating in Texas

Texas homestead law sets strict rules for improvement contracts: they must be in writing and signed by the owners, and their spouses, before any work begins. The renovation contract, loan documents and contractor bids are lined up so the paperwork is done in the right order. Your property taxes will be reappraised on the improved value, so build the higher tax into your budget.