TX VA loan glossary
Mike Certo · Cornerstone First Mortgage · NMLS #260555 ·
VA loans + TX-specific Veteran programs have a vocabulary of their own. This glossary collects the terms Veterans actually encounter, plain-English definitions, and TX-relevant context where useful. Bookmark this page.
A
AMI (Area Median Income) — Income benchmark used by Texas Down Payment Assistance (DPA) programs (TSAHC Homes for Texas Heroes, TDHCA My First Texas Home) to determine eligibility. Limits are set per county for household size.
Assumable — A VA loan can be assumed by a qualified buyer (Veteran or non-Veteraneran). The original Veteran's entitlement stays tied to the loan unless the assuming party is also a Veteran substituting their own entitlement. Full guide.
ARM (Adjustable Rate Mortgage) — VA permits ARMs but most VA loans are fixed-rate. Less common in TX market.
B
BAH (Basic Allowance for Housing) — Monthly housing stipend paid to active-duty service members. Varies by base + rank + dependent status. 2026 Fort Hood E-5 w/dep = $2,289. BAH calculator.
Back-end DTI — Total debt obligations (PITI + other monthly debts) as a percentage of gross income. VA guideline: 41%. Some lenders accept higher with strong residual income.
C
Cash-out refi — VA refinance that pulls equity out of the home. VA allows up to 100% LTV cash-out (higher than conventional 80% cap). Funding fee applies (2.15% first use / 3.30% subsequent).
CFD (Community Facilities District) — Special assessment districts in some TX master-planned communities (Cinco Ranch, Cibolo Canyons, Bridgeland). Adds to monthly housing cost; VA underwriter includes in DTI.
Closing costs — Fees paid at closing — typically 2-4% of loan amount. VA caps several. Seller can pay up to 4% in concessions.
Cluster home — Detached or semi-detached home in a planned community with shared common-area maintenance. Common in TX retirement communities. VA loan eligible if HOA approved.
COE (Certificate of Eligibility) — VA-issued document confirming a Veteran's eligibility for the VA loan benefit. Free, obtained through VA.gov or via Mike. Required before VA loan can close.
Community property — TX is one of nine community property states. Means spouse has automatic 50% interest in property acquired during marriage. Affects how VA loans are titled + how divorce + estate planning interact with the home.
Compensation — VA disability monthly payment based on rating (10%-100%). Federally tax-free in all states.
Conforming loan limit — Maximum loan size for standard VA (or conventional) financing. 2026 TX baseline: $832,750 statewide.
D
Defensible space — Cleared/maintained vegetation around a home in wildfire-prone areas. Required by VA MPR + TX Department of Forestry in WUI zones.
DD-214 — Discharge document issued at military separation. Used to verify VA loan eligibility + claim other Veteran benefits.
Disability rating (VA) — Percentage rating (0% to 100%, in 10% increments) assigned by VA based on service-connected disabilities. 10%+ = waives VA funding fee. 100% in TX = full property tax exemption under HB 2792.
DPA (Down Payment Assistance) — Texas programs that provide grants or forgivable seconds to help with down payment and closing costs. Top programs: TSAHC Homes for Texas Heroes and TDHCA My First Texas Home. Stacker guide.
DTI (Debt-to-Income ratio) — Total monthly debt divided by gross monthly income. VA guideline: 41% back-end. Front-end (PITI only) typically should be ≤29%.
E
Earnest money deposit (EMD) — Money buyer puts up at offer acceptance to show good faith. Standard TX EMD is 1% of price; 2-3% strengthens VA offers in competitive markets.
Entitlement — Veteran's $0-down VA loan capacity. Currently $144,000 basic + 25% of FHFA conforming limit = roughly $208,000 total entitlement in 2026. Limits the $0-down amount; doesn't cap the loan size for Veterans with full entitlement.
Escrow account — Account where lender holds property tax + insurance funds and pays them when due. Most TX VA loans use escrow.
F
FAIR Plan (TX FAIR Plan) — Insurance of last resort for homes that can't get standard market insurance — typically high-wildfire-risk TX properties. More expensive, more limited coverage.
FHFA limit — Federal Housing Finance Agency conforming loan limit. 2026 baseline: $832,750 across all 15 TX counties.
First use — A Veteran's first time using VA loan benefit. Lower funding fee (2.15% at $0 down) vs subsequent use (3.30%).
Front-end DTI — PITI as a percentage of gross income. VA prefers ≤29% but DTI alone doesn't decide approval.
Funding fee — One-time VA fee paid at closing (can be financed). 2.15% first use, 3.30% subsequent at $0 down. Waived for 10%+ disability rating. Calculator.
G
Gross income — Income before taxes. Used for DTI calc.
Gross-up — Treatment of tax-free income (VA disability, BAH, etc.) as higher equivalent taxable income for mortgage qualification. Standard 25% boost. Calculator.
H
HB 2792 — Texas House Bill 2792 (effective Feb 12, 2026), expanded disabled Veteran property tax exemption. 100% rated Veterans get full exemption on primary residence. Full guide.
HOA (Homeowners Association) — Community association charging monthly/annual fees for shared amenities + maintenance. Common in TX master-planned communities. Affects VA DTI calculation.
Homes for Texas Heroes (TSAHC) — Statewide DPA program; Veterans qualify as an eligible hero category. Up to 5% of the loan amount as a grant or 3-year forgivable second. Credit minimum 620.
Home Sweet Texas (TSAHC) — Statewide DPA for buyers who are not in a hero profession, under county income limits. Up to 5% of the loan amount.
I
IRRRL (Interest Rate Reduction Refinance Loan) — VA streamline refi. No income docs, no appraisal, no funding fee if disability waiver. Must pass VA's 36-month recoupment test. Calculator.
Inspection — Buyer-paid home inspection (separate from VA appraisal). Identifies condition issues + bargaining points.
J
Joint VA loan — Two Veterans buying together can use combined entitlement. Each contributes their entitlement; combined down-payment requirement scales accordingly.
Jumbo VA — VA loan above the FHFA conforming limit ($832,750 in TX). Vets with full entitlement can finance to ~$4M with select lenders.
L
Land lease — Property where you own the home but lease the land. Rare in TX. VA typically can't finance.
LO (Loan Officer) — Mortgage professional originating loans. Mike is an LO at Cornerstone First Mortgage. NMLS #260555.
LTV (Loan-to-Value ratio) — Loan amount divided by appraised property value. VA allows 100% LTV (and effectively higher with funding fee financed).
Fort Hood — Killeen, TX. U.S. Army; III Corps and 1st Cavalry Division. One of the largest active-duty posts in the country. Base hub page.
M
MCC (Mortgage Credit Certificate) — Federal tax credit for portion of mortgage interest paid. TX Housing Authority administers. Can stack with VA + DPA.
MHA (Military Housing Area) — Geographic area used to set BAH rates. Fort Hood falls in Houston MHA; Fort Bliss in Dallas MHA.
MPR (Minimum Property Requirements) — VA's property standards. Working A/C, sound roof, adequate water/sewer, no major safety issues, defensible space in wildfire areas.
N
NADL (Native American Direct Loan) — VA loan program for Native Veterans on tribal trust land. VA is the direct lender. Full guide.
Net income — Income after taxes. Used for VA residual income calc.
NMLS — Nationwide Multistate Licensing System for mortgage professionals. Mike: NMLS #260555. Cornerstone: NMLS #173855.
O
Occupancy — VA requires primary residence occupancy within 60 days of closing. No exception for second homes or investment property.
Origination fee — Lender fee for processing the loan. VA caps at 1% of loan amount.
P
My First Texas Home (TDHCA) — Statewide DPA up to 5% of the loan amount, often paired with an MCC. Veterans are exempt from the first-time-buyer requirement.
PCS (Permanent Change of Station) — Military relocation between duty stations. 60-day window from arrival for VA primary-residence occupancy. Summer PCS tactics.
PITI — Principal, Interest, Taxes, Insurance. Total monthly housing payment. Calculator.
Pre-underwriting (TBD) — Full underwriting before a specific property is identified. Strongest pre-approval format; Mike issues TBD letters for TX summer-PCS situations.
Primary residence — VA loan requirement. Must occupy as primary residence within 60 days of closing.
R
Reserves (military) — National Guard + Reserve service. Reservists with 6+ years qualify for VA loan benefit.
Residual income — Net income remaining after PITI + utilities + debts. VA's hidden second qualifying test (separate from DTI). Required minimums by family size + region. Calculator.
Restored entitlement — VA entitlement restored after a previous VA loan is paid off (typically via home sale). Allows reuse for next purchase.
S
Seller concessions — Money seller agrees to pay toward buyer closing costs. VA allows up to 4%.
Subsequent use — Second or later use of VA benefit. Higher funding fee (3.30% at $0 down vs 2.15% first use).
Survivor benefits — Surviving spouse of KIA or service-connected disabled Veteran may be eligible for VA loan + property tax exemptions + Dependency and Indemnity Compensation.
T
TBD (To Be Determined) — Pre-underwriting before property is identified. Strongest pre-approval letter format.
Term — Length of the loan. Standard VA is 30 years; 15-year and 20-year also available.
Tribal trust land — Land held in trust by the federal government for a tribe or individual Native American. Standard VA can't finance; NADL applies.
U
Underwriting — Lender's full review of borrower + property. Verifies income, credit, assets, property.
V
VA appraisal — VA-ordered appraisal verifying property value + MPR compliance. Different from buyer's inspection.
VA Builder ID — Registration number assigned by VA Regional Loan Center to qualified builders. Required for VA construction loans.
VA disability compensation — Monthly tax-free payment based on service-connected disability rating.
VA loan limit — Maximum loan size at full guaranty. 2026 TX baseline: $832,750.
Vested Veteran — Veteran who has earned the VA loan benefit through qualifying military service.
W
Wildfire Factor — Property-specific wildfire risk score (1-10). Higher scores affect insurance availability + costs. Wildfire guide.
WUI (Wildland-Urban Interface) — Areas where development meets wildland. Subject to defensible-space requirements; mostly TX mountain communities.
Z
Zero-down — Standard VA loan feature. No down payment required.
Term you encountered that's not here? Email Mike and he'll add it — this glossary grows as TX Veterans ask new questions.