How VA Loans Work in Texas
A VA loan is a mortgage guaranteed by the U.S. Department of Veterans Affairs. The VA doesn’t lend money directly — it guarantees a portion of the loan, which allows VA-approved lenders to offer favorable terms: no down payment, no private mortgage insurance (PMI), and competitive interest rates regardless of credit score tier.
In Texas, VA loans operate on the standard TREC (Texas Real Estate Commission) purchase contract with two required additions that protect the buyer: the VA Amendatory Clause and, for PCS buyers, a military orders clause. Texas also has a unique feature — the option period — that gives every buyer a contractual right to exit the deal during the inspection window. Understanding all three is essential before you make an offer.
Active-duty service members (90+ days continuous service), veterans (minimum 90 days wartime or 181 days peacetime service with honorable discharge), National Guard and Reserve members (6+ years of service or 90 days active duty under Title 10), and surviving spouses of veterans who died in service or from a service-connected disability. Most Fort Cavazos buyers qualify — verify your specific eligibility at va.gov.
VA Entitlement & Loan Limits in Bell County
VA entitlement is the amount the VA will guarantee on your behalf — which directly determines whether your lender requires a down payment. The key distinction is full entitlement vs. remaining entitlement.
| Entitlement Status | Situation | Down Payment Required? | Loan Limit? |
|---|---|---|---|
| Full Entitlement | Never used VA loan, OR paid off and sold prior VA home | No — $0 down on any amount | No county limit — lender-determined |
| Remaining Entitlement | Active VA loan still outstanding on another property | Possibly — depends on calculation | Based on remaining entitlement and county limit |
| Restored Entitlement | Prior VA loan paid off but home not sold | No — full entitlement restored once | No county limit with full restoration |
For Bell County (Killeen, TX area) in 2026, borrowers with full entitlement face no VA loan limit — the VA will back any amount a lender approves. Bell County lenders routinely approve VA loans up to $600,000+ for qualified borrowers. This matters because it means the $220K–$380K homes in this market are well within VA financing reach at any rank with full entitlement.
Bonus entitlement trap. If you have an active VA loan on a home you still own — for example, you bought in Killeen on your last tour and still own it as a rental — you’re using “remaining entitlement.” Your available entitlement for a new purchase may require a down payment depending on the new loan amount. A VA-experienced lender can calculate your exact situation before you commit to a price range.
VA Funding Fee Table 2026
The VA funding fee is a one-time charge that funds the VA loan program. It is not paid to your lender — it goes to the VA. Most buyers roll it into the loan rather than paying it at closing. The fee varies by loan use (first time or subsequent), down payment amount, and military category.
| Borrower Type | Down Payment | First Use | Subsequent Use | On $220K Loan |
|---|---|---|---|---|
| Active Duty / Veteran | $0 (0%) | 2.15% | 3.30% | $4,730 / $7,260 |
| Active Duty / Veteran | 5–9% | 1.50% | 1.50% | $3,300 / $3,300 |
| Active Duty / Veteran | 10%+ | 1.25% | 1.25% | $2,750 / $2,750 |
| National Guard / Reserve | $0 (0%) | 2.15% | 3.30% | $4,730 / $7,260 |
| 10%+ Disability Rating | Any | ✓ EXEMPT — $0 fee | $0 | |
| Surviving Spouse | Any | ✓ EXEMPT — $0 fee | $0 | |
Source: VA funding fee schedule, effective 2020 and forward per Blue Water Navy Vietnam Veterans Act. Verify current rates at va.gov.
If you have any VA disability rating, check your exemption before closing. Veterans rated 10% or higher are exempt from the funding fee — that’s a savings of $4,730+ on a $220,000 loan. Many veterans don’t know this and pay the fee unnecessarily. Your lender must verify your rating through the VA before assessing the fee. If you receive a disability rating after closing, you can request a refund of the funding fee paid.
Step-by-Step: How a VA Purchase Works in Texas
Texas real estate moves fast and has a few state-specific steps that differ from other markets. Here is the complete process from orders to keys — with the Texas-specific details called out at each step.
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Get your Certificate of Eligibility (COE) Download from va.gov or have your lender pull it directly through the VA portal. Active-duty members need a Statement of Service signed by a personnel officer. Veterans use their DD-214. Most lenders retrieve COEs electronically in under 24 hours.
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Pre-approval with a VA-experienced lender Provide COE, 2 months LES, 2 years W-2s or tax returns, and government-issued ID. VA pre-approval takes 1–2 weeks. The lender calculates your maximum loan amount and issues a pre-approval letter — which your agent needs before writing an offer. Get pre-approved before you start touring.
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Sign a Buyer Representation Agreement Texas law requires a signed buyer representation agreement before your agent shows you homes. This is standard practice — it documents the agency relationship, clarifies compensation, and protects both parties. It does not cost you anything upfront. Read it before signing and ask questions.
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Make an offer with correct VA addenda Your TREC contract must include: (1) the VA Amendatory Clause — required by federal law on all VA purchases, protecting you if the home appraises below purchase price; (2) a military orders clause — protecting your earnest money if orders change. Your agent adds both. Confirm they are present before you sign the contract.
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Option period — inspection and VA prep (5–7 days) You pay a small non-refundable option fee (typically $200–$500) to the seller for the right to exit the contract for any reason during the option period. Use it to get a full home inspection. A good inspector will flag items a VA appraiser is likely to flag — giving you time to negotiate repairs before you’re committed. Never waive the option period on a VA purchase.
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VA appraisal and underwriting (30–45 days) The VA assigns a licensed appraiser from its approved panel — you cannot choose your appraiser. The appraisal serves two purposes: it confirms market value and checks VA Minimum Property Requirements (MPRs). If the home fails MPRs, repairs must be completed before closing. If it appraises below purchase price, you have options (see Section 06).
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Close and file your exemptions Texas closings are efficient — you sign at the title company, wires transfer, and you get keys the same day or next business day. Within 30 days of closing, file your homestead exemption application with the Bell County Appraisal District (BellCAD). If you have a VA disability rating, file your disability exemption at the same time — the savings are significant and the exemption does not apply retroactively to prior years.
The Texas Option Period — What VA Buyers Need to Understand
The option period is one of the most buyer-friendly features of Texas real estate — and it is often misunderstood by out-of-state buyers who are accustomed to contingency-based systems in other states.
The option period is your unrestricted right to terminate the contract. You pay a small, non-refundable option fee (typically $200–$500 in Bell County) directly to the seller. In exchange, you can walk away from the deal for any reason at all during the option period and recover your earnest money in full. After the option period expires, you cannot exit without forfeiting your earnest money unless another specific contingency applies.
Typical option period in Bell County: 5–7 days. Start the clock on the day after contract execution (both parties signed). Use every hour of it.
For VA buyers specifically: The option period and the VA Amendatory Clause serve different purposes and stack on top of each other. The option period lets you exit during inspection for any reason. The VA Amendatory Clause lets you exit after the appraisal if the home appraises below purchase price. Both protections should be in your contract simultaneously — they are not mutually exclusive.
Never let anyone pressure you to waive or shorten the option period. In a competitive market, some listing agents encourage buyers to waive it to make offers more attractive. On a VA purchase, this is a bad idea — you need the option period to do inspections and verify the home won’t fail VA Minimum Property Requirements before you’re fully committed. The $200–$500 option fee is cheap insurance. Keep it.
VA Appraisal & Minimum Property Requirements (MPRs)
The VA appraisal is not the same as a home inspection. It serves two purposes: confirming the home’s market value and verifying it meets VA Minimum Property Requirements (MPRs) — a baseline standard of safety, soundness, and sanitation.
VA appraisers in Bell County are assigned from the VA’s approved panel. They cannot be chosen or influenced by your agent or lender. Turnaround time in the Killeen-Temple market is typically 7–14 days.
Common MPR items that come up on Bell County homes:
1. Negotiate the price down. In Bell County’s current buyer’s market — where homes sell at ~96.7% of list price and seller concessions appear in over 90% of transactions — asking the seller to meet the appraised value is a realistic request. This is the most common resolution.
2. Pay the difference in cash. You can pay the gap between appraised value and purchase price out of pocket. This keeps the deal alive at your agreed price but requires cash on top of closing costs. Only worth it if you have strong conviction the home will appreciate quickly.
3. Walk away. The VA Amendatory Clause gives you the right to terminate and recover your earnest money if the home appraises below purchase price and you choose not to proceed. Never waive this clause.
VA Loans on New Construction in Temple & Killeen
New construction is the most active part of Bell County’s housing market in 2026 — 77 communities, 909+ homes, 23 active builders. VA financing works on new construction with specific conditions that buyers need to understand before going under contract with a builder.
| Requirement | What It Means | Common Pitfall |
|---|---|---|
| VA-approved builder | The builder must be registered with the VA. Most major production builders (D.R. Horton, StyleCraft, John Houston) are VA-approved in Bell County. | Small custom builders may not be VA-registered. Confirm before signing a builder contract. |
| Certificate of Occupancy required | You cannot close on a VA loan until the local authority issues the Certificate of Occupancy (CO). No CO = no closing. | Builder delays are common. A CO expected in 60 days can slip to 90+. Plan your report date accordingly — don’t cut it close. |
| VA appraisal on new construction | The VA appraises new construction based on plans and specs (for pre-construction) or completed value (for spec homes). Both must pass MPRs. | Builder upgrades don’t always add dollar-for-dollar value in VA appraisals. Avoid over-upgrading options if you’re near your budget ceiling. |
| Builder contracts are not TREC forms | Builders use their own proprietary contracts, not the standard TREC form. These heavily favor the builder. | Always have a buyer’s agent review the builder contract before you sign. Builders allow your agent in the process — and it costs you nothing since the builder pays the commission. |
| Rate buydowns stack with VA loans | D.R. Horton and other builders are currently offering 3-2-1 rate buydowns that are compatible with VA financing. | Buydown terms and amounts vary by community and can end without notice. Lock your rate and buydown terms in writing at contract signing. |
Bring your own agent to new construction — always. Builder sales representatives work for the builder. They are friendly and helpful, but their fiduciary duty is to their employer. A buyer’s agent costs you nothing (the builder pays the commission) and gives you someone in your corner during negotiations, contract review, and the walk-through punch list. On a VA purchase, this matters even more — your agent ensures the VA addenda are in the contract and that your interests are protected through the CO process.
The Disabled Veteran Property Tax Exemption in Texas
This is the most financially significant benefit available to veteran homebuyers in Bell County — and the one most commonly missed. If you have a VA disability rating, Texas law provides a property tax exemption that scales with your rating percentage.
| VA Disability Rating | Property Value Exemption | Annual Tax Savings (est.) | On $220K Home |
|---|---|---|---|
| 10–29% | $5,000 off appraised value | ~$99/yr | Partial |
| 30–49% | $7,500 off appraised value | ~$149/yr | Partial |
| 50–69% | $10,000 off appraised value | ~$198/yr | Partial |
| 70–99% | $12,000 off appraised value | ~$238/yr | Partial |
| 100% Service-Connected | Full exemption — entire home | ~$4,356–$7,500+/yr | ✓ FULL EXEMPTION |
| Surviving Spouse (100% rated veteran) | Full exemption continues | ~$4,356–$7,500+/yr | ✓ FULL EXEMPTION |
Tax savings estimates based on Killeen ISD combined rate (~1.98%). Actual savings vary by city and school district. Apply through bellcad.org.
A 100% service-connected disabled veteran who buys a $220,000 home in Killeen pays zero property taxes — saving approximately $4,356 per year, or $43,560 over 10 years. This single benefit completely changes the buy-vs-rent math. A veteran whose monthly PITI was $375 above BAH now has a PITI that may actually come in under BAH after the exemption is applied, since taxes drop out entirely.
How to apply: File the exemption application with Bell County Appraisal District (BellCAD) after closing. Bring your VA award letter showing the disability rating and your DD-214. The deadline is April 30 for the current tax year — applications filed after that apply to the following year. The exemption stays with you as long as you own and occupy the home as your primary residence.
VA Lenders in Bell County — Who Knows This Market
Your lender selection matters on a VA purchase in a way it doesn’t on a conventional loan. A lender inexperienced with VA loans can slow down the appraisal process, miss required addenda, or mishandle entitlement calculations. These are the categories of lenders that serve Bell County military buyers well.
Extraco Banks
Temple-headquartered community bank with deep Bell County roots. Strong VA loan experience and familiarity with the local appraisal market. Good option for buyers who want local relationship banking alongside their mortgage.
RBFCU (Randolph-Brooks FCU)
Military-focused credit union with a strong VA loan track record in Central Texas. Competitive rates and experienced VA loan officers. Branches in Killeen and Temple. Membership open to military-affiliated borrowers.
Veterans United / Navy Federal
National lenders specializing exclusively or heavily in VA loans. Deep institutional experience with entitlement calculations, funding fee exemptions, and complex VA scenarios (bonus entitlement, IRRRL refinances). Good for buyers with complicated entitlement situations.
DR Horton / Builder In-House
If buying new construction, the builder’s preferred lender sometimes offers rate buydowns tied to using their lender. Compare this against the open market before committing — the buydown may be better, or a local lender with a competitive rate may still win overall.
Before committing to a lender, ask: How many VA loans did you close in Bell County in the past 12 months? Have you handled VA loans with remaining entitlement or bonus entitlement? Can you pull my COE directly from the VA portal? What’s your average time to clear to close on a VA purchase? What are your lender fees (origination, underwriting)? A lender who stumbles on any of these questions is not the right choice for your VA purchase.
Ready to Use Your VA Benefit in Bell County?
I work with VA buyers every week. I’ll connect you with the right lender, make sure your contract has every required addendum, and walk you through the appraisal process so there are no surprises at closing.
Moody Glasgow · REALTOR® · Orchard Realty · License #795158
Frequently Asked Questions
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Moody Glasgow · REALTOR® · Orchard Realty · License #795158 · texashomesbymoody.com