How Texas Property Tax Exemptions Benefit VA Loan Borrowers with a 550 Credit Score

For veterans, owning a home is often a lifelong goal that symbolizes stability, independence, and reward for years of dedicated service. The VA loan program makes this dream more accessible, particularly for veterans who might face financial or credit challenges. 

However, veterans with lower credit scores, such as a 550, often find the process more complex. Fortunately, Texas offers property tax exemptions specifically for veterans, which can help ease the cost of homeownership, making it a more achievable goal even for those with lower credit.

In this post, we’ll explore how Texas property tax exemptions can provide significant savings and financial support for veterans with credit scores of 550 or similar, helping them afford their homes and create a path to long-term financial success.

The VA Loan Program and Low Credit Scores

A VA loan offers veterans key advantages, including low or zero down payments, competitive interest rates, and flexible qualification requirements. One of the program's highlights is its accessibility, as the VA does not enforce a minimum credit score. However, most lenders set their credit score benchmarks, typically ranging from 580 to 620. 

For those with a 550 credit score, qualifying can be a bit more challenging but is not impossible. Working with a mortgage broker can help veterans with low credit scores navigate these requirements by connecting them with flexible lenders or helping them improve their credit score.

This is where property tax exemptions come into play. For veterans with limited financial resources, even a slight reduction in monthly expenses can make a significant difference. Property tax exemptions can help bridge the gap, making monthly mortgage payments more manageable for veterans with lower credit scores.

Understanding Property Tax Exemptions in Texas

Texas recognizes the sacrifices of its veterans by offering property tax exemptions that can reduce or eliminate the amount of tax owed on their primary residence. These exemptions fall under two main categories:

1. General Disabled Veterans’ Exemption – Veterans with a service-connected disability rating are eligible for a reduction in property taxes. The amount depends on the disability rating, with higher ratings qualifying for larger exemptions.
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3. 100% Disability Homestead Exemption – Veterans who are 100% disabled due to service-connected injuries are exempt from paying property taxes entirely on their primary residence, regardless of the home's value.

These tax exemptions can help veterans with lower credit scores by lowering monthly housing costs. For those struggling to meet monthly payments or other financial obligations, these exemptions provide a cushion that can improve financial security.

The Impact of Property Tax Exemptions on Affordability for Low-Credit Borrowers

For veterans with a 550 credit score, keeping monthly expenses low is essential. Mortgage lenders are typically more flexible with VA loans, but lower credit scores can still result in slightly higher interest rates. By reducing the annual property tax burden, veterans can allocate more of their monthly income toward other expenses, mortgage payments, or paying down debt, which may ultimately help improve their credit score over time.

Example Scenario:

Imagine a veteran with a 550 credit score qualifies for a VA loan and purchases a $250,000 home in Texas. Depending on the county, the property tax on this home could be approximately $5,000 annually, or around $416 per month. If this veteran has a 50% disability rating, they would qualify for a partial exemption, reducing their property taxes by a significant amount.

This reduction lowers the overall cost of homeownership, helping to offset any additional costs that may arise due to a lower credit score, such as a slightly higher interest rate. This small monthly savings can help veterans maintain their mortgage, avoiding late payments that could further harm their credit.

How New Horizons Mortgage Brokers Support Veterans with Tax Exemptions

At New Horizons Lending, we understand the unique needs of veterans and work to help our clients make the most of available benefits, including property tax exemptions. 

Our team guides veterans through the exemption application process and explains how these exemptions affect their overall financial plan. Additionally, we work with veterans to secure competitive loan terms tailored to their specific financial profiles, even when they have lower credit scores.

For veterans purchasing a home in Texas with a low credit score, combining the power of VA loans with property tax exemptions creates a more affordable pathway to homeownership. With these benefits, veterans can focus on maintaining their homes and building long-term financial security.

Final Thoughts

For veterans with a 550 credit score, purchasing a home in Texas may feel daunting. However, with the right support and a clear understanding of available financial benefits, homeownership is achievable and affordable. Texas property tax exemptions play a critical role in making this dream more accessible, providing valuable monthly savings that can ease the financial demands of homeownership.

At New Horizons Lending, we’re committed to helping veterans succeed in their home-buying journey. From navigating VA loan qualifications to applying for property tax exemptions, we’re here to ensure that our clients make informed financial decisions. If you’re a veteran with a lower credit score considering a home purchase in Texas, contact us to learn how VA loan benefits can make homeownership a reality.