A Guide: Does USAA Offer Home Loans

You’ve served your country with honor and dedication. Now you deserve a home that reflects your achievements and aspirations. But where can you find a home loan that meets your needs and preferences? What if you could get a home loan from a lender that understands the military lifestyle and values?

That’s where USAA comes in. USAA is a bank and lending institution that caters to the military community and their families. USAA offers a range of financial products and services, including mortgages.

But does USAA offer home loans that suit your situation and goals? What are the pros and cons of USAA home loans? How can you qualify for a USAA home loan? How can you apply for a USAA home loan?

In this guide, we will answer these questions and more. We will cover the following topics:

• What types of home loans does USAA offer?
• What are the benefits and drawbacks of USAA home loans?
• How do you qualify for a USAA home loan?
• How do you apply for a USAA home loan?

By the end of this guide, you will have a better understanding of USAA home loans and whether they are right for you.

What types of home loans does USAA offer?

USAA offers several types of home loans, including:

• VA purchase loan: This is a mortgage that is backed by the Department of Veterans Affairs (VA). It is available to eligible veterans, active-duty service members, and surviving spouses who meet certain criteria. A VA loan does not require a down payment or private mortgage insurance (PMI), and usually has lower interest rates and closing costs than conventional loans. USAA specializes in VA loans and can help you with the eligibility and application process.
• VA Interest Rate Reduction Refinance Loan (IRRRL): This is a refinancing option for existing VA loans. It allows you to lower your interest rate or shorten your loan term without getting cash back at closing. An IRRRL does not require an appraisal or income verification, and has minimal paperwork and fees.
• VA cash-out refinance loan: This is a refinancing option that allows you to tap into your home’s equity and get cash back at closing. You can use the cash for any purpose, such as debt consolidation, home improvement, or education. A VA cash-out refinance loan requires an appraisal and income verification, and has higher fees than an IRRRL.
• Conventional purchase loan: This is a mortgage that is not insured or guaranteed by any government agency. It is available to anyone who meets the lender’s requirements. A conventional loan may require a down payment of at least 3% and PMI if your loan-to-value ratio (LTV) is higher than 80%. A conventional loan may have higher interest rates and closing costs than a VA loan.
• Conventional refinance loan: This is a refinancing option that allows you to replace your existing mortgage with a new one that has different terms or rates. You can choose between a rate-and-term refinance or a cash-out refinance. A rate-and-term refinance changes only the interest rate or the loan term without getting cash back at closing. A cash-out refinance allows you to get cash back at closing by borrowing more than you owe on your current mortgage.
• Low down payment loan: This is a conventional loan that requires a down payment of as little as 3%. It is designed for first-time home buyers who have limited savings or credit history. A low down payment loan may require PMI and an online course for first-time home buyers. 
• HomeReady® program: This is a low down payment loan option that is offered by Fannie Mae, one of the government-sponsored enterprises that buy mortgages from lenders. The HomeReady® program allows borrowers to use income from other household members or renters to qualify for the loan. It also offers flexible underwriting guidelines and reduced PMI costs.
• VA jumbo purchase loan: This is a VA loan that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac, another government-sponsored enterprise that buys mortgages from lenders. The conforming loan limit for 2022 is $647,200 in most areas of the country, but it may be higher in some high-cost areas. A VA jumbo loan allows eligible borrowers to finance more than $647,200 with no down payment and no PMI.
• VA jumbo refinance loan: This is a refinancing option for existing VA jumbo loans. It allows eligible borrowers to refinance their VA jumbo loans with lower interest rates or shorter terms. It does not allow cash-out refinancing.

What are the benefits and drawbacks of USAA home loans?

Some of the benefits of USAA home loans are:

• Low interest rates: According to the latest federal data, USAA offers relatively low mortgage interest rates compared with other lenders. However, your actual rate may vary depending on your credit score, LTV ratio, loan type, term, and other factors.
• No origination fee: USAA does not charge an origination fee for its home loans. An origination fee is a one-time fee that covers the lender’s costs of processing and underwriting your loan. Origination fees typically range from 0.5% to 1% of the loan amount.
• Military expertise: USAA has over 90 years of experience serving the military community and their families. USAA understands the unique needs and challenges of military borrowers, such as frequent relocation, deployment, disability, and retirement. USAA can help you navigate the eligibility and application process for VA loans and other benefits.
• Online convenience: USAA offers online tools and resources to help you with your home buying or refinancing journey. You can get preapproved online, Okay, I will continue writing the blog post. Here is the next part:

What are the Benefits and Drawbacks of USAA Home Loans?

Some of the benefits of USAA home loans are:

• Low interest rates: According to the latest federal data, USAA offers relatively low mortgage interest rates compared with other lenders. However, your actual rate may vary depending on your credit score, LTV ratio, loan type, term, and other factors.
• No origination fee: USAA does not charge an origination fee for its home loans. An origination fee is a one-time fee that covers the lender’s costs of processing and underwriting your loan. Origination fees typically range from 0.5% to 1% of the loan amount.
• Military expertise: USAA has over 90 years of experience serving the military community and their families. USAA understands the unique needs and challenges of military borrowers, such as frequent relocation, deployment, disability, and retirement. USAA can help you navigate the eligibility and application process for VA loans and other benefits.
• Online convenience: USAA offers online tools and resources to help you with your home buying or refinancing journey. You can get preapproved online, complete your mortgage application online, upload documents online, track your loan status online, sign documents electronically, manage your payments online, and use USAA’s mortgage calculator to estimate your monthly payment.

Some of the drawbacks of USAA home loans are:

• Limited product selection: USAA does not offer some types of home loans that may be available from other lenders, such as FHA loans, USDA loans, second mortgages, home equity loans, or home equity lines of credit (HELOCs).  If you are looking for these options, you may need to shop around with other lenders.
• Limited rate information: USAA’s website does not provide customized rate quotes based on your personal information. To get an accurate rate quote from USAA, you will need to contact them by phone or online. This may make it harder for you to compare rates with other lenders.
• Membership requirement: USAA’s products and services are only available to eligible military members and their families. To qualify for a USAA membership, you must be one of the following:

•   An active-duty service member
•   A former service member who received an honorable discharge
•   An eligible family member of an active-duty or former service member
•   A cadet or midshipman at a U.S. service academy
•   An officer candidate within 24 months of commissioning

If you do not meet these criteria, you will not be able to access USAA’s home loans or other benefits.

How do you apply for a USAA home loan?

To apply for a USAA home loan, you will need to follow these steps:

• Step 1: Get preapproved online: Getting preapproved is a preliminary step that gives you an estimate of how much you can borrow based on your credit score, income, assets, and debts. It also gives you a preapproval letter that shows sellers that you are a serious and qualified buyer. To get preapproved online with USAA, you will need to provide some basic information about yourself and your finances. USAA will check your credit report and give you an instant decision. Getting preapproved online does not obligate you to borrow from USAA or affect your credit score.
• Step 2: Complete your mortgage application: Once you find a home that you want to buy or decide to refinance your existing mortgage, you will need to complete your mortgage application with USAA. You can do this online or by phone with the help of a USAA loan officer. You will need to provide more detailed information about yourself, your finances, your property, and your loan type. You will also need to submit supporting documents, such as pay stubs, tax returns, bank statements, and other documents. USAA will review your application and verify your information.
• Step 3: Get approved and close your loan: After reviewing your application and documents, USAA will make a final decision on whether to approve your loan or not. If your loan is approved, USAA will send you a loan estimate that outlines the terms and costs of your loan. You will need to review the loan estimate and sign it to accept the offer. You will also need to schedule a home appraisal and a home inspection if required. USAA will coordinate with the title company and the closing agent to prepare the closing documents and set a closing date. On the closing day, you will need to sign the closing documents and pay any closing costs or fees. You will also receive the keys to your new home or the funds from your refinance.

Conclusion

USAA is a bank and lending institution that offers home loans to eligible military members and their families. USAA offers several types of home loans with different features and benefits, such as VA loans, conventional loans, low down payment loans, and jumbo loans. USAA also offers low interest rates, no origination fee, military expertise, and online convenience.

However, USAA also has some drawbacks, such as limited product selection, limited rate information, and membership requirement. USAA does not offer some types of home loans that may be available from other lenders, such as FHA loans, USDA loans, second mortgages, home equity loans, or HELOCs. USAA’s website does not provide customized rate quotes based on your personal information. USAA’s products and services are only available to eligible military members and their families.