Last updated: September 2025
Quick Answer
VA loans in Texas follow national VA loan guidelines, but Texas adds unique rules—like an 80% loan-to-value (LTV) cap on cash-out refinances. Basic Allowance for Housing (BAH) can help service members qualify for more, and entitlement limits depend on whether you’ve used your benefit before.
How VA loans work in Texas
If you’re an eligible service member, veteran, or surviving spouse, VA loans offer one of the best home financing options in Texas. These loans are backed by the U.S. Department of Veterans Affairs and come with major advantages:
- No down payment required
- No private mortgage insurance (PMI)
- Flexible credit guidelines
- Competitively low interest rates
But while the VA sets the national guidelines, Texas adds a few state-specific rules that impact how your loan is approved—especially when refinancing or using your Basic Allowance for Housing (BAH) to qualify.
VA loan entitlement in Texas
Entitlement is the amount the VA guarantees on your behalf. In Texas, just like elsewhere in the U.S., your VA entitlement determines how much you can borrow without a down payment.
Here’s how VA entitlement works:
| Entitlement Type | Description |
|---|---|
| Full entitlement | You haven’t used your VA benefit yet, or you’ve restored it fully. |
| Partial entitlement | You still have an active VA loan or have previously defaulted on one. |
As of 2025, if you have full entitlement, you can borrow above local loan limits without a down payment—a big deal in Texas markets like Austin, Dallas, and Houston, where home prices are rising fast.
If you have partial entitlement, VA loan limits apply based on your county’s conforming loan limit. In high-cost counties, that status can still allow for substantial borrowing, but you may need to contribute a down payment to cover the shortfall.
Can BAH help you qualify for a VA loan in Texas?
Yes—if you’re an active-duty service member stationed in Texas, your Basic Allowance for Housing (BAH) can count as qualifying income for your VA loan.
Here’s how it helps:
- Increases your total gross income for loan qualification
- Offsets housing costs if your BAH matches or exceeds your mortgage payment
- Supports residual income calculations, which VA lenders use instead of a strict debt-to-income (DTI) cap
Texas has some of the highest BAH rates in the country for certain metro areas, especially near military installations like:
- Fort Cavazos (formerly Fort Hood) near Killeen
- Joint Base San Antonio
- Naval Air Station Corpus Christi
If you’re stationed in these areas, your BAH could make a big difference in what you can afford.
The 80% LTV cash-out refinance cap in Texas
One of the biggest differences between VA loans in Texas and other types of loans is the cash-out refinancer ule. Under Texas Constitution Section 50(a)(6), any cash-out refinance—VA or otherwise—is limited to 80% loan-to-value (LTV).
This means:
- If your home is worth $300,000, your new loan amount can’t exceed $240,000
- This cap applies even though VA national rules allow up to 100% LTV
- It only affects cash-out refinances, not VA purchase loans or IRRRLs (streamlined refinances)
So while you can use a VA loan in Texas to tap into your home equity, you’ll be capped at 80% of your home’s appraised value when doing so.
Note: The 80% rule does not apply to purchase loans or IRRRLs in the state of Texas. Those can still go up to 100% LTV, subject to VA guidelines and lender approval.
Additional Texas-specific rules for VA loans
Texas veterans benefit from unique protections and opportunities when using their VA loan benefit. Here are a few additional rules and features to keep in mind:
Property tax exemptions
Veterans in Texas may qualify for property tax exemptions based on their VA disability rating:
- 100% disabled veterans may qualify for a full exemption on property taxes
- Veterans with 10% to 90% disability may be eligible for partial exemptions
These exemptions are handled at the county level; therefore, please check with your local tax appraisal district to apply.
Texas Veterans Land Board (VLB)
While separate from VA loans, the Texas VLB program provides land and home loans specifically for Texas veterans. You can use a VLB home loan in conjunction with your VA benefit in some cases, depending on the lender and program rules.
Closing costs and fees
Texas law imposes certain restrictions on allowable fees, particularly in refinance transactions. VA loans already restrict non-allowable fees, and Texas lending law adds extra consumer protections.
- Lenders cannot charge excessive origination fees
- Attorney fees, if required by the lender, must be disclosed and capped
- A 12-day waiting period is required before closing a cash-out refinance
VA loan limits in high-cost Texas counties
As of 2025, if you have partial entitlement, the VA will consider the conforming loan limit in your county. While most Texas counties adhere to the standard baseline limit of $766,550, some higher-cost areas may exceed this limit.
Examples of high-priced housing markets in Texas include:
- Austin–Round Rock
- Dallas–Fort Worth–Arlington
- Houston–The Woodlands–Sugar Land
Even in these markets, you can still buy above the limit with a VA loan—but you’ll need to make a down payment to cover the gap, unless you have full entitlement.
Pros and cons of VA loans in Texas
Here’s a quick overview of how VA loans stack up in the Lone Star State:
| Feature | Advantage | Limitation |
|---|---|---|
| No down payment | Up to 100% LTV allowed for purchase loans | Must meet credit and income guidelines |
| Low interest rates | Competitive with or better than conventional loans | May vary based on lender and market |
| BAH counts as income | Can increase buying power for active-duty service members | Only applies to military housing-eligible personnel |
| 80% cash-out cap (state law) | Adds equity protection for homeowners | Limits cash-out refinance potential |
| No loan limits with full entitlement | Allows jumbo loan amounts with zero down | Only applies if entitlement is fully available |
FAQ: VA loans in Texas
Yes. VA loans are available statewide in Texas and adhere to national guidelines, with a few state-specific exceptions.
If you have full entitlement, there’s no loan limit. With partial entitlement, limits follow the conforming loan cap, currently $766,550 in most counties.
Your BAH is treated as income and can help you qualify for a higher loan amount. This is especially useful in high-cost areas of Texas near military bases.
Under state law, all cash-out refinances, including VA loans, are capped at an 80% loan-to-value ratio. This does not apply to VA purchase loans or IRRRLs.
Yes. In addition to the federal VA loan program, Texas offers property tax exemptions and separate land/home loan programs through the Veterans Land Board.
Ready to use your VA loan in Texas?
Whether you're buying your first home, refinancing, or relocating to a Texas military base, the VA loan program offers unmatched benefits—including no down payment and flexible credit terms.
Be sure to account for Texas-specific rules, such as the 80% cash-out cap and community property laws.
Buying in Texas? Tap your VA benefits and BAH to buy more with less. Get a free quote today.
