USDA and VA loans are No Down Payment mortgage options with BIG differences!
As a USDA and VA approved lender, one of the most common questions I receive is, “What are the differences between USDA and VA loan?”. Both USDA and VA loans are great no down payment mortgage options. However, it’s vital that you know the differences in their eligibility, if PMI applies, and the different benefits for each program.
USDA and VA loans provide fantastic financing options and mortgage qualifying flexibility. On the other hand, their unique features and eligibility requirements are a must-know for home buyers and realtors. In today’s video, I’ll review the big differences between USDA and VA loans.
Plus, download our FREE Loan Comparison chart and see the features of USDA, VA, FHA, and Conventional Loans compared to each other in one simple chart. In it, you’ll discover maximum financing amounts, fees, waiting periods and more. Download it now!
No Down Payment USDA and VA Loans
USDA and VA loans are known for their no down payment mortgage and flexible credit qualifying. Credit flexibility is added by:
- Reduced minimum scores; and
- Manual underwriting availability; and
- Reduced time frames for recent bankruptcies, foreclosures, and short sales.
Please note, minimum credit conditions still apply.
When compared to each other, USDA and VA loans have very different eligibility criteria. Let’s review those requirements now.
USDA guidelines specify that applicants must meet household income limits as outlined per county. In addition, the property being purchased must be located in a USDA eligible area.
On the other hand, VA loans are only available to eligible military service members, and in some cases surviving spouses.
Do USDA or VA loans have PMI?
USDA loans do not technically have Private Mortgage Insurance (PMI), but they do have an annual fee. This annual fee is calculated on a monthly basis and is included with your mortgage payment.
Furthermore, there is also a one-time charge based on a 1% Guarantee fee. This charge is collected at closing and may be financed into the loan.
VA loans do not have PMI or any monthly charges. However, there is a one-time VA Funding Fee that is collected at closing and may be financed into the loan.
The VA Funding Fee ranges between 0% to 3.6% and was just updated as of 1/2/2020. It is calculated based on:
- The type of service,
- Previous usage,
- Purchase or refinance,
- And if there was any down payment made.
The funding fee is waived for certain Veterans with a service-connected disability. The surviving spouse of a Veteran may also have their funding fee waived if certain eligibility criteria are met.
If you find this all a bit confusing, feel free to download our Loan Comparison Chart. This chart shows the financing amounts, fees, waiting periods and more for USDA, VA, FHA, and Conventional Loans. You can download it here!
Who can help you qualify for a no down payment mortgage?
Remember, USDA and VA loans are great no down payment mortgage options. Plus, as an approved USDA and VA lender we offer in-house underwriting for both of these valuable programs.
The Metroplex team takes great pride in serving both our military and rural communities.
In addition, our experience has led to expertise in the following areas:
- VA Certificate of Eligibility,
- Calculating the VA entitlement,
- Reviewing eligible USDA areas and property types,
- Determine USDA income eligibility,
- And much more!
Don’t forget, if you need any help or have questions please call (800) 806-9836 Ext. 280 or email SeanS@MPLX.org. We are your resource for ALL loan types, so let us show you the “Metroplex” difference!