While VA loans offer numerous benefits, it’s important to understand all aspects of homeownership, including property taxes. Below, we’ve shared some important information about property taxes when using VA home loans and how to prepare for this ongoing expense.
How Property Taxes Work
Property taxes are a fact of life for homeowners, regardless of the type of mortgage you have. These taxes fund local services like schools, roads, and emergency services. The amount you pay depends on your home’s assessed value and the local tax rate.
VA Loans and Property Taxes
One common misconception is that VA loans exempt veterans from paying property taxes. Unfortunately, this is not true. While VA home loans offer many benefits, property tax exemption isn’t one of them. However, some states and localities do offer property tax breaks for veterans, which are separate from your VA loan benefits.
How Property Taxes are Paid
Property taxes can be paid in different ways, but the most common is through escrow. When you use a VA loan, your lender will typically set up an escrow account to manage your property tax payments. A portion of your monthly mortgage payment goes into the account and your lender pays the property taxes on your behalf when they’re due.
Estimating the Cost of Property Taxes
Before buying a home, it’s important to understand the cost of property taxes. Research the property tax rates in the areas where you are house hunting. Keep in mind that rates can vary substantially between neighboring towns or regions.
Additionally, you may want to consider taking the following steps to prepare financially:
- Include estimated property taxes in your budget when house hunting.
- Ask your real estate agent about typical property tax rates in your target areas.
- Look into any available veterans’ property tax exemptions in your state or locality.
- Consider setting aside extra money each month to cover potential tax increases.
Property Tax Increases
Keep in mind that property taxes can increase over time. This can happen if your home’s assessed value goes up or if local tax rates increase. Be prepared for potential adjustments to your monthly payment if property taxes rise.
Challenging Your Tax Assessment
If you believe your property has been assessed too high, you have the right to challenge the assessment. This process varies by location, but it typically involves providing evidence that your property’s value is lower than the assessed value.
Seeking Assistance
If you’re struggling with paying property taxes, there may be assistance available. Some areas offer property tax deferment programs for seniors or those experiencing financial hardship. While these programs aren’t specific to VA loans, they can be helpful for veteran homeowners.
Get More Information
If you have any questions about VA loans, property taxes, or any other aspect of the home-buying process, don’t hesitate to reach out. We’re here to support you every step of the way on your journey to homeownership.
