Texas VA Loan Benefits: The 100% Disabled Veteran Property Tax Exemption and More
By Mark Christoffersen, Broker/Owner, Access Capital Group, Inc. — LoanGoal
Texas has some of the highest property taxes in the country. For most homeowners, taxes add hundreds of dollars a month to the mortgage payment. But if you’re a Veteran with a 100% VA disability rating, Texas takes that cost off the table completely.
Add in a VA loan with zero down, no monthly mortgage insurance and no funding fee for disabled Veterans, and Texas is one of the best states in the country for a Veteran to buy a home. Here’s every benefit you should know about, and how we use them to get Veterans approved, even with credit challenges.
Texas Benefits for Veteran Homebuyers at a Glance
| Benefit | What it means for you |
| 100% disabled Veteran exemption | No property tax on your homestead if you receive 100% VA disability compensation (100% rating or IU) |
| Partial disabled Veteran exemption | $5,000 to $12,000 off your home’s taxable value, based on your rating (10% and up) |
| General homestead exemption | $140,000 off your home’s value for school taxes, for every Texas homeowner |
| Surviving spouse exemption | Your spouse can keep the exemption if they don’t remarry |
| VA funding fee exemption | No VA funding fee with a service-connected disability rating (10% or more) |
| No state income tax | Your paycheck, retirement and VA benefits go further |
The 100% Disabled Veteran Property Tax Exemption
If you receive 100% VA disability compensation, Texas exempts the full value of your homestead from property taxes. Not part of it. All of it. That includes school, county, city and special district taxes.
Who qualifies
- You receive 100% VA disability compensation for a service-connected disability, and
- You have either a 100% disability rating or a VA finding of individual unemployability (IU). You don’t need both.
- The home is your residence homestead in Texas. The exemption doesn’t apply to rentals or second homes.
How to apply
- Get your current VA benefit summary letter showing your rating or IU status (from VA.gov).
- Fill out Form 50-114, Application for Residence Homestead Exemption.
- File it with the appraisal district in the county where the home is, along with your VA letter and a Texas driver’s license or ID showing the new address.
The normal deadline is April 30, but you can file late for up to five years after the taxes were due.
Buying during the year
You don’t have to wait until January 1. When you buy a home during the year, the exemption can start right away for the rest of that tax year. You only owe taxes for the part of the year before you owned the home and qualified. If you’re moving from one Texas homestead to another, the exemption on the old home ends when you move and starts on the new one.
| THE LOANGOAL ADVANTAGE Send us your VA benefit summary letter at the start. Your rating affects your funding fee, your income, your property taxes and your payment, so we build it into your approval from day one, and we’ll show you what your payment looks like before and after your exemption is in place. |
Partial Exemptions for 10% to 90% Ratings
Not at 100%? You still get a break. Texas takes a set amount off the taxable value of one property you own, based on your rating:
| VA disability rating | Amount off your home’s taxable value |
| 10% to 29% | $5,000 |
| 30% to 49% | $7,500 |
| 50% to 69% | $10,000 |
| 70% and up (not 100%) | $12,000 |
This stacks with the $140,000 general homestead exemption for school taxes. If your rating goes up to 100% or IU later, file again for the full exemption.
Benefits for Surviving Spouses
- A surviving spouse who has not remarried can keep the 100% exemption on the home the Veteran owned at the time of death.
- If the spouse moves, the exemption on the new home is limited to the dollar amount of the exemption on the old home.
- Surviving spouses of service members killed in the line of duty may qualify for a full exemption on their homestead.
- Surviving spouses who receive Dependency and Indemnity Compensation (DIC) may also be eligible for a VA loan themselves with no funding fee.
How No Property Taxes Helps Your VA Loan
Your mortgage payment includes principal, interest, homeowners insurance and property taxes. In many Texas counties, property taxes run around 2% of the home’s value every year. On a $300,000 home, that’s about $6,000 a year, or $500 a month.
For a 100% disabled Veteran, that tax bill goes away once the exemption is in place. That means:
- A lower monthly payment for as long as you own the home.
- More residual income. VA looks at how much money you have left each month after your bills. Lower taxes leave more, which is a strong compensating factor on a manual underwrite.
- Room to buy more home for the same monthly payment.
One thing to know: at closing, the lender may still collect an escrow deposit and qualify you using estimated taxes until the appraisal district approves your exemption. Once it’s approved, your loan servicer adjusts your escrow and your payment goes down. We’ll walk you through exactly how your taxes are handled on your loan.
No VA Funding Fee for Disabled Veterans
The VA funding fee is normally 1.25% to 3.3% of the loan amount. On a $300,000 loan, that can be $6,000 to nearly $10,000. If you receive VA compensation for a service-connected disability, you don’t pay it at all. And if your rating is approved after you close, you can ask the VA to refund the funding fee you paid.
Other Texas Rules Every Veteran Should Know
- No VA loan limit with full entitlement. If you have full VA entitlement, you can buy with zero down at any price you qualify for.
- No state income tax. Your pay, military retirement and VA benefits aren’t taxed by the state.
- Strong military markets. We help Veterans and active duty families near Fort Hood (Killeen), Fort Bliss (El Paso), Joint Base San Antonio, NAS Corpus Christi, NAS Kingsville, NAS JRB Fort Worth, Dyess AFB (Abilene), Goodfellow AFB (San Angelo), Sheppard AFB (Wichita Falls) and Laughlin AFB (Del Rio).
VA Loans in Texas Down to a 500 Credit Score
The VA does not set a minimum credit score. Many Texas lenders still require 580 or 620, and that rule, called an overlay, is the most common reason Veterans get turned down. At Access Capital Group, Inc. — LoanGoal, we’ve been a no-overlay VA lender since 2001:
- VA loans down to a 500 credit score with manual underwriting.
- Manual underwrites done right. We document residual income, reserves, steady VA disability income and other strengths that get files approved.
- VA after bankruptcy or foreclosure. Generally 2 years after a Chapter 7 bankruptcy or foreclosure, and possible during a Chapter 13 with court approval.
- Higher debt ratios. VA focuses on residual income, so a debt-to-income ratio above 41% can still be approved with strong residual income.
- VA disability income counts. It’s tax-free and doesn’t expire, so it’s some of the strongest income an underwriter can see.
| VETERAN PROFILE: 100% DISABLED VETERAN NEAR FORT HOOD James is an Army Veteran in Killeen with a 100% VA disability rating and a part-time job. A medical collection and a few late payments after leaving the service dropped his credit score to 560, and two lenders told him he needed a 620. We reviewed his file under the VA guidelines instead. His VA compensation is tax-free and doesn’t expire, his last 12 months of payments were on time, and with the 100% exemption he will pay no property tax on his new homestead, which leaves him strong residual income. He paid no funding fee and closed with zero down after a manual underwrite. Example for illustration only. Every loan is reviewed on its own facts. |
| THE LOANGOAL ADVANTAGE Told you need a 620 for a VA loan in Texas? That’s an overlay, not a VA rule. Take our 5-minute VA Manual Underwrite Questionnaire at loangoal.com, and we’ll tell you what it takes to get you approved. |
Frequently Asked Questions
Do 100% disabled Veterans pay property taxes in Texas?
No, not on their homestead. A Veteran who receives 100% VA disability compensation and has either a 100% service-connected rating or individual unemployability (IU) pays no property tax on their residence homestead in Texas. File Form 50-114 with the county appraisal district along with your VA award letter.
Does the exemption apply to the home I just bought?
Yes. If you qualify after January 1, including buying a new home during the year, the exemption can start right away for the rest of that tax year. You owe tax only for the part of the year before you owned the home and qualified.
What if my rating is less than 100%?
Texas gives a partial exemption based on your rating: $5,000 off your home’s value at 10% to 29%, $7,500 at 30% to 49%, $10,000 at 50% to 69%, and $12,000 at 70% or more. It stacks with the regular homestead exemption, which is $140,000 for school taxes.
Can my spouse keep the exemption if I pass away?
Yes. A surviving spouse who has not remarried can keep the 100% exemption on the home. If they move, the exemption on the new home is limited to the dollar amount of the exemption on the old home. Surviving spouses of service members killed in the line of duty may also qualify for a full exemption.
Do I have to pay the VA funding fee?
No, if you receive VA compensation for a service-connected disability (10% or more). If your rating comes through after you close, you can ask the VA for a refund of the funding fee you paid.
Can I use VA disability income to qualify for a mortgage?
Yes. VA disability compensation is steady, tax-free income that does not expire, and it counts toward qualifying. Because it is not taxed, it can often be “grossed up” when figuring your debt-to-income ratio.
Is there a minimum credit score for a VA loan in Texas?
The VA does not set a minimum credit score. Many lenders require 580 or 620 as an overlay. Access Capital Group, Inc. — LoanGoal offers VA loans down to a 500 credit score with manual underwriting.
Is there a VA loan limit in Texas?
Not if you have full VA entitlement. With full entitlement there is no VA loan limit, so you can buy with zero down as long as you qualify for the payment. If part of your entitlement is tied up in another VA loan, county limits apply to the zero-down amount.
Buying a Home in Texas? Talk With a VA Loan Specialist
Access Capital Group, Inc. — LoanGoal has helped Veterans buy homes since 2001 as a no-overlay VA lender, with VA loans down to a 500 credit score. We’re licensed in Texas and 17 other states, and we’ll help you put every Texas benefit to work, from your property tax exemption to your funding fee waiver.
