Jane Dotson
USAA Mortgage is the home loan division of USAA Bank, a financial institution primarily serving military members, veterans, and their families. USAA offers a range of mortgage options, including conventional mortgages, VA loans, jumbo loans, and USDA loans. While USAA does not explicitly mention private mortgage insurance (PMI) on their website, it is important to understand how it works in the context of their loan offerings. Private mortgage insurance is typically required when borrowers make a down payment of less than 20% of the purchase price, serving as protection for the lender in case of borrower default.
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What You'll Learn
VA loans
USAA offers a variety of different types of VA loans, including VA jumbo loans, which are for service members looking to finance more than $510,400. VA loans are mortgages guaranteed by the U.S. Department of Veterans Affairs. They are available to eligible service members, veterans, and surviving spouses.
To obtain a VA loan, borrowers will need a Certificate of Eligibility (COE) to demonstrate their qualification based on service history and duty status. A good credit score is also beneficial, with USAA requiring a minimum score of 640. While the VA does not set a minimum credit score, most lenders will want to see a score of 620 or higher.
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Conventional loans
A conventional mortgage is a home loan that is not insured or guaranteed by a government agency. It typically requires a higher credit score and a larger down payment, but it offers more flexibility with property types and loan options. These mortgages typically require private mortgage insurance (PMI) for borrowers who make a down payment of less than 20% of the purchase price. This serves to protect the lender in case the borrower defaults on the loan.
USAA offers fixed-rate conventional loans with terms of 30 years, 20 years, 15 years, or 10 years. The Conventional 97 loan is designed for first-time homebuyers and can only be used for a primary residence. It requires a down payment of just 3%, but the lender will pay for the private mortgage insurance needed for this loan. However, the cost is passed on to the borrower through higher interest rates than a conventional loan.
USAA also offers conventional jumbo loans, which are for home purchases that exceed $806,500. These loans require a 20% down payment and are available in 30- or 15-year terms.
In addition to conventional loans, USAA specializes in VA loans, which are backed by the Department of Veterans Affairs. These loans do not require a down payment or private mortgage insurance, making them a popular choice for eligible service members, veterans, and their spouses.
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Conforming loans
A conforming loan is a mortgage that meets the criteria set by the Federal Housing Finance Agency (FHFA) and the funding criteria of Freddie Mac and Fannie Mae. Conforming loans have a set dollar limit that changes annually. For 2025, the baseline limit is $806,500 for most parts of the US, but this is higher in certain more expensive areas, such as San Francisco and New York City, where the limit is $1,209,750. Conforming loans are advantageous for borrowers with excellent credit due to their low-interest rates.
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FHA loans
USAA offers Federal Housing Administration (FHA) loans, which are home loans secured by the Federal Housing Administration. FHA loans are designed to help borrowers with lower credit scores and smaller down payments qualify for a mortgage. They often have more lenient qualification criteria but require mortgage insurance premium (MIP) as protection for the lender in case the borrower defaults on the loan.
The mortgage insurance requirement for FHA loans is known as Mortgage Insurance Premium (MIP). MIP is typically required when the down payment is less than 20% of the purchase price. MIP serves as protection for the lender in case of borrower default. The cost of MIP can vary depending on factors such as the loan amount, loan term, and down payment size. It is typically paid as an upfront fee at closing and then as an ongoing monthly payment added to the mortgage payment.
While FHA loans offer flexibility in terms of down payment and credit score requirements, there are also certain limitations to consider. FHA loans have maximum loan limits that vary by county and property type. Additionally, FHA loans may have more stringent requirements when it comes to the condition of the property, as the home must meet certain safety and habitability standards. Furthermore, borrowers with FHA loans may face restrictions on certain types of properties, such as condos or manufactured homes.
Compared to conventional loans, FHA loans tend to have more relaxed qualification criteria, making them accessible to a wider range of borrowers. However, it's important to weigh the benefits against the potential costs, including the requirement for mortgage insurance. Borrowers considering an FHA loan should carefully review the guidelines, eligibility requirements, and associated fees to make an informed decision based on their financial situation and homeownership goals.
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USDA loans
USDA loan programs include the Single Family Housing Guaranteed Loan Program, the Rural Development Loan Program, and the Rural Rental Housing Loan Program. The latter provides affordable multi-family rental housing for very low-, low-, and moderate-income families, the elderly, and persons with disabilities.
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Frequently asked questions
Yes, USAA charges private mortgage insurance for conventional loans. However, the lender pays the private mortgage insurance, and the cost is passed on to the borrower through higher interest rates.
No, USAA does not charge private mortgage insurance for VA loans. VA loans are exempt from private mortgage insurance requirements, providing a significant benefit to borrowers.
Yes, USAA offers USDA loans, which may incur fees similar to private mortgage insurance. However, these loans are designed to support homebuyers in rural areas and offer low to no down payment options.
USAA's VA loans are popular due to their exemption from origination fees, competitive interest rates, and flexible qualification guidelines. More than half of the mortgages originated by USAA are VA loans, making them a specialty of the company.
