One of the most valuable Texas-specific VA loan questions is whether you can combine the federal VA home loan benefit with the Texas Veterans Land Board’s Veterans Housing Assistance Program (VHAP). In many cases, yes.
The Texas General Land Office states that eligible Texas Veterans and Military Members can apply for VA, FHA or conventional financing through VLB participating lenders. The GLO has also stated that Veterans who use VA-backed home-buying benefits along with VLB’s home loan program may be eligible for a home loan with no down payment and no PMI.
How the programs fit together
Think of the programs as two layers rather than two competing mortgages. VA provides the federal home-loan benefit and guaranty structure. VLB provides a Texas housing-assistance program for eligible Texas Veterans and Military Members.
The lender has to structure the transaction so that all applicable VA, VLB and investor requirements are satisfied.
Who is eligible for VLB?
VLB eligibility is different from VA eligibility. The VLB requires applicants to be at least 18, be bona fide legal residents of Texas at application, and meet one of its qualifying military-service categories. The program also has rules concerning discharge status and surviving spouses.
Because the VLB is a Texas program, moving out of Texas or not meeting its residency rules can change eligibility even when federal VA eligibility remains intact.
What properties qualify?
VLB VHAP is designed for a qualifying Texas primary residence. The VLB lists single-family attached or detached homes, townhomes and condominiums among eligible property types, with additional rules for multifamily properties and new construction.
The home must remain the borrower’s primary residence for the required period, and the borrower generally must occupy it within 60 days after closing.
What does combining them potentially accomplish?
The most important potential benefit is that a Texas Veteran may be able to access a VLB-supported mortgage using VA-backed financing, potentially preserving VA features such as no down payment and no PMI while also receiving VLB program benefits. A qualifying disability rating may also make the borrower eligible for a VLB interest-rate discount.
This is a transaction-specific question. Do not treat the combination as an automatic entitlement.
Does VLB eliminate the VA funding fee?
Not necessarily. The VA funding fee is a federal VA program charge that can apply to VA-backed loans unless the borrower qualifies for an exemption. VLB participation does not automatically create a VA funding-fee exemption.
If you are exempt under VA rules, that exemption should be confirmed through the appropriate VA documentation. Otherwise, ask the lender how the funding fee will be handled in the proposed transaction.
Can you use VLB without VA?
Yes. The VLB states that eligible borrowers may apply for VA, FHA or conventional financing through participating lenders. That means VLB is not simply a “VA add-on.” It is a separate Texas program that can interact with several mortgage types.
However, the financial and underwriting implications differ depending on the underlying loan type.
Questions to ask a participating lender
Ask: Is the lender approved for the VLB program? Can my transaction use VA-backed financing with VHAP? Do I qualify for the VLB disability discount? What are the current VLB loan amount and rate? Does my property meet VHAP rules? How will the VA funding fee be calculated? What is my total cash to close?
Getting these answers before making an offer can prevent surprises.
Bottom line
The federal VA benefit and Texas VLB benefits can work together for eligible borrowers. The exact structure depends on your eligibility, property, lender and current program rules. For Texas Veterans, asking about both programs during preapproval is often more useful than assuming the federal VA benefit is the only available option.
Not sure whether you qualify for a VA loan in Texas, or how your credit, entitlement, income and closing costs affect the numbers? Talk with a Novus Texas loan professional before you start making offers. A detailed preapproval can help you understand your options before you commit to a home.