What are the Differences Between USDA and VA Home Loans?
What are the differences between USDA and VA Home Loans?
There are three important differences between USDA and VA home loans. As many of us know, both USDA and VA loans offer no down payment financing, which makes them great options for homebuyers. However, they each have unique features and eligibility requirements and today’s post will discuss three key factors that illustrate the differences between USDA and VA home loans.
To help you stay organized and understand the unique differences, we created a FREE Loan Comparison Chart for you to download. This side-by-side comparison sheet compares the differences between USDA loans, VA home loans, FHA, and Conventional loan programs. Be sure to download it now.
USDA and VA Loans Compared
Both USDA and VA home loans allow for NO down payment! They are also known for their flexible credit qualifying, manual underwriting availability, and shortened time frames for qualifying after recent bankruptcies, foreclosures, and short sales.
Key Differences Include:
- Eligibility Requirements: USDA guidelines state that applicants must meet household income limits as outlined per county and the property must be located within a USDA eligible area.On the other hand, VA home loans are only available to eligible military service members and, in some cases, surviving spouses.Both USDA and VA home loans are very different from FHA and Conventional loan qualifying guidelines.
- Maximum Loan Amount: There is NO maximum USDA loan amount, which may be the biggest best kept secret. The USDA maximum loan amount is calculated on the applicant’s ability to qualify.For a VA home loan, the basic entitlement for each eligible Veteran is $36,000 and allows for loan amounts up to $144,000. For loans above the given $144,000, a veteran may utilize a “bonus entitlement” that will allow them to increase the amount over $144,000.Additionally, the Blue Water Navy Vietnam Veterans Act of 2019, has helped expand maximum guaranty amounts under the VA program. As a result, there are NO maximum loan amount under the VA program where a veteran has full entitlement available!
- Mortgage Insurance: USDA loans do not require private mortgage insurance (PMG), but they do have an annual fee. This fee is calculated monthly and will be included with your mortgage payment. USDA loans also require a one-time, 1% Guarantee fee that is collected at time of closing and is permitted to be financed into the loan.While VA loans do not have PMI or an annual fee, they do require a VA funding fee that ranges from 0% – 3.6% and is calculated based on the type of service, previous usage, purchase or refinance, and down payment. This is also a one-time fee that is collected at closing or financed into the loan.Please note that the VA funding fee may be waived for certain Veterans that have service-connected disability and for the surviving spouse of a Veteran who meets certain eligibility requirements.
Benefits of working with a USDA and VA Approved Lender
Metroplex Mortgage Services is a USDA and VA approved lender and we take pride in serving our rural and military communities. As a result of our specific USDA and VA loan experience, we have specific loan systems in place that assist our clients through the qualification process and allow our team to assist with important items, such as:
- VA Certificate of Eligibility
- Calculating the VA Entitlement
- Reviewing Eligible USDA Areas and Property Types
- Determining USDA Income Eligibility
- Upfront Review for those who are Self Employed
As a USDA Approved Lender in Florida, Tennessee, Alabama, and Texas, let our USDA experience and expertise go to work for you!
Just call or email to discuss your scenario and let us show you the “Metroplex” difference!
Toll Free: (800) 806-9836 X 280
Call/Text: (863) 451-3032
SeanS@MPLX.org
Don’t forget to download our USDA Blueprint for Success with the link below:
