A Guide to Understanding VA Funding Fee

VA home loan in Texas and other parts of the U.S. are offered to American veterans or their surviving spouses. These loans are guaranteed by the US Department of Veteran Affairs and come with several benefits such as zero down payment, lower than usual interest rates, and no prepayment penalty. While most of the closing costs can can be paid by the seller, veteran borrowers are required to pay the VA funding fee, a onetime fee, out of their pocket. Veteran borrowers may also get this fee rolled into their loan account. If you are on active duty or a retired veteran, and are thinking of obtaining a VA home loan in Texas, you must know about the VA funding fee.

house on packs of banknotes on a grey background

Defining VA Funding Fee

VA funding fee is charged to lower the taxpayer’s burden and cover any losses that may arise due to the borrowers defaulting. The fee is paid directly to the VA and helps them continue providing benefits such as zero down payment to borrowers. Funding fee is a percentage of the loan amount and depends on many factors such as your military category, and whether you are buying your first home or a subsequent property. You can either choose to pay the VA funding fee upfront in cash or request the lender to roll this cost into your loan amount.

The Fee Amount

To be eligible for a  VA loan you do not have to provide down payment, however, paying some amount upfront helps and can lower the quantum of VA funding fee, which is 2.15 percent of the total amount for borrowers with no down payment. You can lower this to 1.5 percent by paying a down payment of  5 to 9 percent of the loan amount. If you have more cash at your disposal, pay 10 percent of the loan amount or more, which would help bring the VA funding fee down further to around 1.25 percent. Borrowers with a previous VA loan are required to pay 3.3 percent of the loan amount as VA funding fee.


Qualified veterans with a service related disability are exempt from paying VA funding fee. Surviving spouses of veterans who died in the line of duty, or due to a service-connected injury or disability can also apply for this benefit. Eligible borrowers need to apply for this exemption and must mail documents such as Certificate of Eligibility, a copy of the VA notification of disability rating, signed VA Form 26-8937, and documentation of retirement income received to the VA.


VA funding fee is one of the major costs associated with getting a VA home loan in Texas. When applying for a loan, ask your lender about the VA funding fee. The good news is that you can ask the lender to roll the cost in your loan amount, which makes owning your dream home affordable. That said, you must also remember that this will increase your monthly payment obligation.


A Guide to Help Understand My First Texas Home Program

Financing is one of the most important considerations when buying a house. Homebuyers need to research about the available home loans to choose one that suits them best. The decision can be difficult, particularly for first time homebuyers, as they have limited knowledge about where they can look for the best deals. To make homeownership more affordable and easy to obtain, the state of Texas runs My First Texas Home Program. To help spread awareness about the program, the post discusses some important info about it. Take a look.

First Texas Home Program

Eligibility Criteria

  • Available for households that fall in moderate and low income group.
  • The property must be located in Texas or a federally declared disaster area.
  • The borrower must be a first time homebuyer. Buyers who have not owned a home in the last three years are also eligible.
  • The property must be the buyer’s primary residence.

Types of Homes Financed

You can get a first time homebuyer loan to finance a new, existing or under construction house subject to a couple of conditions:

  • The price of the home must not exceed $370,379.
  • The house must have a permanent base and should comply with FHA guidelines.


  • Competitive interest rates.
  • Down payment assistance available.
  • Long repayable mortgage (30 years).

Documents Required

When applying for a My First Texas Home loan, applicants would be required to submit certain documents that the lender will study to determine whether the borrower is in a financial position to afford the mortgage. Some of the common documents required by most lenders are:

  • Salary stubs and tax statements for the last three months.
  • Copy of the sale contract.
  • Recent bank statements of all the accounts held by the borrower.
  • Credit report.
  • Details about the outstanding amount, account numbers, and the nature of debt owed (in case of long term debts).
  • Proof of additional income.

Application Process

My First Texas Home loan program is backed by The Texas Department of Housing and Community Affairs. Loans are provided by private lenders recognized by the body. After the applicant files the application and submits necessary documents, the lender will evaluate different factors such as the individual’s debt obligations, income, employment status, and credit rating to determine whether they’d be able to abide by payment timelines. The lender would also pre-qualify the applicant on the basis of their financial standing.

Summing up

My First Texas Home is one of the most accessible programs for first time homebuyers in Texas. Texas also has other assistance programs for homeowners to help them buy the house of their dreams. Irrespective of the program they choose, it is important for buyers to compare them as this’d help them identify the best option according to their situation.

Weighing the Pros and Cons of Different Home Loans in Texas

Many first time homebuyers in Texas and other parts in the US rely on a home loan to secure their dream home. Though there is no dearth of home loan programs in Texas, choosing the one that best suits your requirement may not be easy, because as a first time buyer you may lack the knowledge and expertise to differentiate between different home loans. While some home loans may not require you to pay a down payment, others may offer lucrative interest rates. If you are confused about which home loan to pick, in this post we discuss the available loan options in Texas along with their pros and cons. Let’s take a look.

Texas home loan

1. VA Loan

The VA loan program is a federally backed housing program, guaranteed by the Department of Veteran Affairs. The program aims at assisting veterans of the American Armed services or their spouses in cases wherein the veteran dies of a service related cause to buy a first home or refinance a property. Goes without saying, the program being guaranteed by a federal body offers many benefits; however, you must learn the pros and cons before filing for a VA loan.


  • Zero down payment
  • Zero Private Mortgage Insurance (PMI)
  • Zero prepayment penalty
  • No minimum credit score requirements
  • Can be effectively used for purchasing a first home or refinancing
  • A nominal allowable debt-to-income ratio
  • Entertains bankruptcy and foreclosure cases


  • Requires an upfront funding fee
  • Only meant to purchase primary residences and not holiday homes
  • Loan limits and overlays

2. USDA Loan

USDA loans are offered under the USDA Rural Development Guaranteed Housing Loan Program. The program assists eligible applicants, mainly people with low to moderate income in securing their dream home in the rural regions of Texas and elsewhere in the US.


  • Upto cent percent financing
  • No restrictions on lot size or seller contributions
  • No prepayment penalty
  • Provision of gift funds to cover closing costs
  • Ideal for both purchase or refinance


  • Income restrictions depending on the median salary of people living in that area
  • Monthly Private Mortgage Insurance for Lifetime
  • Buyer is expected to occupy the home as primary residence
  • Only single families are eligible
  • Up to 3 weeks more processing time than other home loans
  • Strict guidelines on debt to income ratio and credit score

3. FHA Loan

Started during the great depression in the 1930s, the FHA loan program is one of the most affordable loan programs for low income groups to secure a home in Texas or elsewhere in the US. Under the FHA loan program, a loan always originates from a FHA approved lender to protect the interests of the homebuyer.


  • A minimum down payment of 3.5 percent of the total value of home
  • Seller can pay the entire amount of closing costs
  • Competitive interest rates than conventional loans
  • Offers flexibility when it comes to credit score and past financial record
  • Larger allowable income to debt ratios


  • Requires an upfront loan fee to be rolled with the loan amount
  • Lifetime MIP
  • Strict loan limits depending on the region

4. Conventional Loans

Conventional loans, as the name suggests, are offered by private lenders. A conventional loan can either be a fixed rate loan or a jumbo mortgage. For a fixed rate loan, the interest rates doesn’t fluctuate that much and therefore, it’s quite easy to predict the final amount that a person will pay at the end of the tenure. A jumbo loan, on the other hand, has a much higher rate of interest than fixed term mortgages. The reason, there are no minimum credit requirements to secure this type of loan, which is a risky proposition for many lenders. All in all, going for a conventional loan has its share of pros and cons.


  • A nominal down payment, usually lying in the range of 3-5 percent
  • PMI drops after some time
  • Lower monthly PMIs than FHA


  • Stringent credit score and debt to ratio requirements
  • Interest rates are more than federally backed counterparts such as VA, FHA and USDA
  • Seller can only pay a maximum of 6 percent in closing costs

Wrapping Up

Once you decide which loan type is best for you, the job is only half done. Securing any type of loan requires the applicant to meet guidelines specific to the loan program and complete necessary paperwork. Applying for a home loan, especially for the first time is a challenge for many. To get clarity on the process and increase your odds of your loan application going through, you must consult a Texas Home loan and Mortgage company. Mortgage companies have dedicated loan officers who can help you in each aspect of the home loan process from the start to finish.

5 Common Questions About USDA Loan Answered

USDA loan with zero down payment benefit is a popular home loan for home buyers with no military service history. Affordable payment plans, low interest rates, 100 percent financing and low-credit eligibility criteria are a few reasons that make USDA home loans a better option than most of the other conventional loans. If you are looking for an easy way to buy a home, put USDA above the other available options. In this post, we cover five common questions that home buyers usually ask before obtaining a USDA loan.

Question 1: What is the qualification criteria for a USDA loan?

The location of the property is the most important qualification criteria. The applicant can obtain a loan for a house that is within the USDA-eligible geographic area. Borrowers making up to 115% of the median income of the area where they want to purchase a home are eligible for the USDA loan. A family of four, for instance, planning to buy a home in Los Angeles area has the annual income limit of $98,200.

Question 2: Is it necessary that the property should be in good condition for USDA loan approval?

The condition of the property is another vital qualification criteria, if you are applying for USDA loan. The property needs to meet the minimum standards to get loan approval. An appraiser inspects the condition of the property to states the same in the appraisal report. The qualification standards are almost the same as for FHA loan.

Question 3: Can I purchase a manufactured home with USDA loan?

The buyers in most cases qualify for a USDA loan if they are purchasing a new manufactured home. There are, however, a few scenarios where the lender might approve USDA home loans for a pre-existing manufactured house. If the current owner of the house already has USDA loan on the property, you might be able to get a nod from the lender.

Question 4: Is there any minimum credit score required for a USDA loan?

Applicants with a credit score of 660 or above usually have the highest chances of getting USDA grants. The score was set to a minimum 640 on December 1, 2014, but it did not affect most of the applicants as many lenders already had the minimum score set at the same level. Borrowers with no traditional credit history are also eligible for USDA loan, provided they show their rental history, insurance payments and utility payment records.

Question 5: What is the term of the USDA loan program?

A guaranteed loan (guaranteed by the third party) earlier had a fixed payment tenure of 30 years, and borrowers were given the option to reduce the tenure to 15 years in September 2014. Direct loan has two repayment options for 33 years and 38 years. If the income of the borrower is above 60 percent of the annual monthly income, the USDA approves a tenure of 33 years. A USDA loan for manufactured home has a loan term of 30 years.

Last Few Words

Backed by the United States Department of Agriculture, USDA loan has several benefits such as low interest rates and zero-percent financing, which make it a more affordable choice over traditional loan options. More than 166,000 families availed the benefits of USDA loan in 2015. Before you apply for a USDA loan in Texas or any other state, make sure to have a thorough understanding of all the eligibility criteria, pros and cons of USDA loans process and payment plans, which makes it easier to qualify for the approval.

All you Need to Know About Single Family Housing Direct Home Loan

Many families fail to acquire home loans in the US, especially those living in rural areas. This is where the USDA section 502 Direct Home Loan Program comes into the picture. The loan program assists the families with low and very low income with payment assistance and helps them obtain safe housing in eligible rural areas. Although, single-family housing direct loan is a viable option to secure new house, the applicant needs to meet certain eligibility criteria. The blog post lists a few factors you need to keep in mind while applying for direct home loans.

Home Loan

Eligibility Criteria

The USDA home loan program is for the families living in rural areas with less than 35,000 population. To be eligible for the loan, the applicant should not have a decent housing, and the income needs to be below 50 percent of the medium income of the area demonstrated. That said, the borrower needs to have a good credit history.

Use of Funds

The fund approved by the authority is not limited to buying a new home, and could also be used at several other places. An individual, for instance, could repair, build or relocate the home, and purchase sites too. You can also use the loan to provide water facilities in your area.

Maximum Loan Amount

The maximum loan amount depends on the applicant’s ability to repay the loan. Other factors such as income, debt, assets and payment assistance are also considered when deciding the repayment terms. Regardless of all the considerations and repayment ability, the applicant is restricted to borrow up to their area’s loan limits.

Interest Rate

If you as an applicant are eligible for payment assistance, the interest rate could go as low as 1 percent. The applicants are offered an interest rate based on the current market interest rate at the time of loan approval. USDA also gives you an added benefit of payback year up to 33 and 38 years. Although, the borrowers are supposed to payback the loan in 33 years, those who are unable to do so are given the flexibility to stretch the loan term to 38 years.

Processing Time

Once you have applied for Direct Home Loan, it could either be instantly processed or you might need to wait for some time. The processing time entirely depends on the availability of funds for the specific area.


Direct housing home loans are a way to help individuals with very low income enjoy the benefits of owning a house. These types of homeownership opportunities are initiated to promote prosperity and improve the quality of life of the people living in rural areas. Before you apply for one of these programs, it is important to consult the right program instructor to have a fair idea of small yet important details associated with the loan program.

Explaining the 4 Common Types of Home Loans in Texas

Many people depend on home loans for securing their dream home in Texas or other American states. As there are more than a few home loans in Texas, it can be confusing to find the best loan that offers a lucrative rate of interest and does not burn a hole into your pocket. The blog post discusses the four most sought after home loans in Texas that offer the best home loan rates in Texas. Let’s take a look.

Home Loans in Texas

1. FHA

Originally introduced during the 1930s during the Great Depression, the FHA loan program aims to assist people in buying homes who fall under the limited income bracket. FHA loans are guaranteed by the United States Federal Housing Administration and can be obtained by anybody and not just first time home buyers. Only lenders approved by the FHA can offer loans under this program, to protect the interests of the borrowers. FHA loan comes with a  pre-insurance scheme to cover up for any borrower defaults; however, the borrower needs to bear the premium that reflects as a higher monthly installment.

2. VA

VA loans are offered by the US Department of Veteran Affairs to help military service personnels and their families secure a home. Similar to FHA, only pre-verified lenders may take part in the program. Unlike FHA, veterans are not required to pay an up front down payment to avail a loan under the VA scheme. In most cases, the federal government charges a funding fee that can be up to 3.15 percent of the total loan amount. Approving a VA loan requires a veteran to meet the guidelines laid by the federal government, but this loan is a lucrative option to receive 100 percent financing to buy a home. The maximum sanctioned amount; however, cannot exceed the maximum limit of $625,500.


USDA loans are offered by the United States Department of Agriculture and are meant for rural borrowers who meet certain income criteria. This loan program caters to the needs of rural borrowers who have a moderate income, but are still unable to self-sponsor their home. For availing a USDA loan, the intended property should fall under any of the “rural areas” in the US and not otherwise. To qualify for an USDA loan, the applicant’s income shouldn’t exceed 115 person the median income in the area. Moreover, there is also a capping to the maximum loan entitlement amount to discourage wealthy people from the program. All USDA loans require a zero down payment; however, the repayment period is restricted to 30 years.

4. First Time Homebuyer Mortgage

The First Time Homebuyer Mortgage, commonly known as the Texas Mortgage program is a lucrative loan option for first time homebuyers in Texas. The income requirements in this program vary depending on the location of the property. Similar to Texas Mortgage program, borrowers can get a loan under another program called Texas First Time homebuyer program to buy a property within Texas. This program is beneficial for those homebuyers who can afford a partial down payment, if not full. Both the programs offer competitive interest rates and necessary help on closing costs that comes out to be approximately 5 percent of the total loan amount.

The Bottom Line

Most first time homebuyers go for conventional loans and end up paying higher than required home loan rates in Texas. Applying for any of the loans mentioned in the blog post, helps borrowers save the additional interest they pay when they obtain conventional loans. These loans are pre-insured to cover defaults by borrowers and are backed by respective federal government bodies, they have lower interest rates. Before you apply for any home loan in Texas, it is advisable to consult an expert who can guide you about suitable home loans options after analyzing your monthly income, repaying capability and other required factors.

VA Loans Eligibility Requirements: A Sneak Peek

VA loans are one of the most beneficial home loan programs for veterans, and active military members. Although, VA loans do have their share of pros and cons, their advantages are any day more than the cons. You can secure a home with VA mortgage without the need to pay any down payment, and private mortgage insurance, not to forget the perk of low interest rates when compared to conventional loans. Like any other mortgage program, however, VA home loans have certain eligibility requirements. Let’s discuss a few of these requirements in this brief post.

Income Requirements

The VA has not set a minimum requirement when it comes to the income of VA applicants, however, it expects you to earn at least an amount of income that is sufficient to meet your monthly expenses. VA applicants must have a minimum residual income to ensure they are able to meet their food, medical, transportation, and other basic needs.

Credit and Other Requirements

VA loans also has certain credit and debt-to-income ratio requirements. The reason is that it is not the VA, but a VA-qualified lender who issues the loan, and wants to ensure that the borrowers have a good credit standing. The credit requirement for VA home loan is still much lenient than when you apply for a conventional loan. Most VA lenders expect you to have a minimum credit score of 620. This figure is not fixed and may differ from one VA lender to another.

VA Loan Limits

Most VA home loan borrowers, as per the current VA rules, can borrow a home loan of up to $424,100. This figure can increase, if you live in an expensive region. Find the VA loan limit for your city and state here.

There’s More!

VA home loans have many other requirements. You have the minimum property requirements, for instance, where in the home you are considering to purchase must be hygienic, safely accessible from the road, and meet other requirements the VA has set. VA loan applicants are also required to pay a funding fee that may range from 0 to 3.15 percent of the total loan amount. By speaking to a loan banking officer, you can learn about VA loan limits in your county, property, and other requirements.