Using a VA Loan to Buy a Hill Country Home With Acreage Near San Antonio

Can you use a VA loan to buy a home with acreage in the Texas Hill Country?

Yes. A VA loan can buy a Hill Country home on acreage near San Antonio if it's your residence, but VA won't cover land or farm buildings beyond the residential use.

Some of my favorite closings are with military buyers who've spent years in base housing and finally want room to breathe. They call me from JBSA-Randolph or Fort Sam Houston and say, "Vanessa, I want five acres, a porch and no neighbors I can see." I love that call.

Then comes the next question: "Can I do that with my VA loan?" Most of the time the answer is yes, with a few rules that matter a whole lot more on acreage than on a lot in a subdivision. I've spent close to 20 years reading Hill Country land, so here's how I explain it, straight from VA's own guidance.

First, Your Entitlement

Your Certificate of Eligibility (COE) shows your VA entitlement, which is the amount VA guarantees to pay your lender if the loan goes bad. Here's the part that surprises people. According to VA.gov's entitlement and loan limits page, if you have full entitlement, you don't have a VA loan limit.

That doesn't mean unlimited money. Your lender still has to approve you based on your credit, income, debts and assets. VA also explains that the $36,000 "basic entitlement" figure you may see on your COE isn't the amount you can borrow. For loans over $144,000, VA generally guarantees up to 25% of the loan amount through bonus entitlement.

If you've already used part of your entitlement and haven't restored it, your remaining entitlement is figured off the county loan limit, and a down payment may come into play. That's a conversation for you and your lender before we ever start touring land.

The Big Rule: You Have to Live There

VA's purchase loan page says it plainly: you'll live in the home you're buying with the loan. A VA loan is for your residence. It isn't for a weekend hunting lease, a rental or a piece of investment land you plan to hold.

That same page lists what a VA purchase loan can do, including buying a single-family home, buying a home and improving it, and building a new home. You can also skip the down payment as long as the sales price isn't higher than the home's appraised value, and there's no private mortgage insurance.

How VA Treats Land and Acreage

This is where Hill Country buyers need to slow down. VA's Home Loan Guaranty Buyer's Guide explains that a VA loan can buy the residential portion of a farm property. The loan cannot cover:

• The non-residential value of farmland beyond the home site
• Barns, silos or other outbuildings needed for farm operations
• Farm equipment or livestock

VA's basic property checklist adds that any non-residential use of a property has to stay secondary to its residential use and character.

So what does that look like out here? In my experience, the question is whether the place is a home first. A house on a few acres with a garden and a shop reads very differently than a working cattle operation where the land earns its keep. The more a property looks and appraises like a farm business, the more of it may fall outside what VA will finance, and your lender and the VA appraiser make that call, not me.

Buying Land to Build

Buying bare land by itself isn't on VA's list of purchase loan uses. VA's Buyer's Guide says a construction loan can build a home on property you already own or want to buy as part of the loan. I've got a whole post coming in December on building a custom home with a VA loan, so I'll save the details for that one.

The VA Appraisal and Minimum Property Requirements

Every VA purchase loan requires an appraisal. The appraiser checks the home's value and whether it meets VA's minimum property requirements, or MPRs. VA's own training materials sum them up as safe, sound and sanitary.

VA's basic MPR checklist includes things like:

• A continuing supply of safe, drinkable water for the household
• Sanitary facilities and a safe method of sewage disposal
• Heating adequate for healthful, comfortable living
• A roof that keeps moisture out
• Electricity for lighting and equipment

Out here in Comal County and the rest of the Hill Country, plenty of acreage homes run on a private well and a septic system. VA's appraisal process looks at whether the water and sewage systems are acceptable, and private wells, septic systems and private roads can all come up. When I walk a property with a VA buyer, I'm already looking at the well, the septic area, the slope and the road in, because those are the things that can surprise you late in a deal.

After the appraisal, VA issues a Notice of Value. It shows the estimated value, the comparable sales used, and a list of any repairs needed to meet MPRs. VA's Buyer's Guide is also clear that an appraisal is not a home inspection, so please get a full inspection on any acreage home.

What About the Funding Fee?

Most VA loans carry a funding fee, which can be paid in cash or rolled into the loan at closing. VA's Buyer's Guide lists veterans receiving VA compensation for a service-connected disability among those who are exempt. Your lender can tell you the current fee for your situation.

VA rules and fees change from time to time. Please confirm every detail with VA and your lender before you make a decision on a specific property.

FAQ

Can I buy a farm or ranch with a VA loan?

VA says a VA loan can buy the residential portion of a farm property. It can't cover non-residential farmland value beyond the home site, barns or outbuildings needed for farm operations, or equipment and livestock.

Is there a VA loan limit for a Hill Country home?

VA says borrowers with full entitlement don't have a VA loan limit, though your lender still has to approve the amount. If you have reduced entitlement, county loan limits come into play and you may need a down payment.

Does a VA appraisal check the well and septic?

VA's minimum property requirements call for a continuing supply of safe drinking water and a safe method of sewage disposal. Private wells and septic systems can come up during the VA appraisal, so talk with your lender early.

Let's Find Your Hill Country Acreage

You earned this benefit, and I'd be honored to help you use it on a piece of the Hill Country. I work with military buyers from JBSA-Randolph, Fort Sam Houston and Lackland all the time, and I know how to spot the acreage issues before they turn into appraisal headaches. Call me at 210-707-9029 or browse homes and land anytime at vhbhomes.com.

As always, I hope to see y'all around town.

Vanessa H. Bradford
REALTOR® | Coldwell Banker D'Ann Harper, REALTORS®
Hill Country Queen | VHB Homes
210-707-9029 | vhbhomes.com