Everything You Need to Know About VA Loans
If you've served our country and are planning on buying a home, you'll definitely want to take advantage of a VA loan. These low-interest, no-money-down loans are a great benefit available to veterans and make home buying much easier. We're here to answer all your questions about the loans.
What if I don't plan on staying in the home?
You only lived in your house for a little over a year when you found out you had to move to a different state. Does that mean you're going to take a big hit on your taxes?
Thanks to the capital gains exemption, you don't have have to pay taxes on up to $250,000 of profit from the sale of your house, or $500,000 for married couples. As long as you've lived in your home for at least two of the last five years. That can be a problem for a lot of military families who might have to move unexpectantly. The good news? There are a few exceptions.
Qualified extended duty
The two year time period makes sense for a civilian, but what happens if Uncle Sam needed you somewhere else for some of those years? There is a provision to let you suspend the time you spent away from home if it's connected to your military duties. So, if you lived in the house for a year, then were deployed for four, and then came home for another year, you can suspend the four years you were on duty. You suspend any 10 year period if you were:
- at a duty station at least 50 miles from your home
- living in government housing due to government orders
If you're moving because of a permanent change of station, then you might be eligible for the partial exclusion on the capital gains tax. Be sure to talk to a tax advisor to make sure your particular situation meets the requirements.
There are lots of other ways states help veterans pay less in property taxes. Check with your state's VA office to make sure you're taking advantage of all of them!
When interest rates are low, many people start looking at refinancing their homes. The Interest Rate Reduction Refinance Loan is a program within the VA loan benefit structure to help veterans take advantage of lower interest rates while still using their VA loan benefits.
What if I want to refinance?
You can use the IRRRL program to refinance from one VA loan to another. Or in other words, you can't use it to go from a VA loan to a traditional or a vice versa. You also won't be able to use it to get cash-out refinancing.
Benefits of an IRRRL loan
- You don't have to spend money up front: When you refinance with a traditional loan, there are closing costs and other fees you pay up front. But a lender can give you an interest rate high enough to cover all the costs in an IRRRL. You'll still be paying the fees, but you'll be doing it over time instead of upfront.
- You don't need to get an appraisal or credit underwriting package.
- You don't need an additional Certificate of Eligibility.
- Your occupancy requirement is more lenient: With an IRRRL loan, you'll only need to prove you used to use the home as your primary residence, not that you are doing so now.
Whether Uncle Sam brought you there or you've just always dreamed of buying a home in the Lone Star state, Texas has some great benefits for veterans. The benefits are in addition to the VA Loan and are administered through the Texas Veterans Land Board.
Tell me about VA Loans in Texas
If there's one thing Texas has a lot of, it's open spaces. So, it only makes sense that the Texas Veterans Land Board offers VA loans specifically for buying land. And since the loans are for land, not homes, you can use the benefit even if the land won't be your primary residence. The tradeoff is you do have to have a 5% downpayment on the land, unlike traditional VA loans that don't require a downpayment. The terms of the loan are also a little more strict--you're required to use a fixed-rate 30-year-loan for up to $125,000 on tracts of one acre or more.
To qualify for the benefit, your land must:
- Be completely in Texas
- Be at least one acre, not including any public roads, waterways, or any unusable land
- Have legal and usable access to a public road
- Be properly described by either a Field Note description of the track with the Surveyor's Official Seal and Signatures or a complete copy of the recorded subdivision plat if the description is by Lot & Block
- Not have been owned by you or your spouse in the past 3 years
- Not be zoned for strictly commercial use
You can find land for sale in Texas on the Veterans Land Board site.
So, if you're a Texas veteran, don't miss out! There are plenty of home and land buying programs to make it easier for you to make a life in Texas.