The United Services Automobile Association (USAA), was established in 1922 and offers membership to men and women who currently serve or have served in the military along with their direct dependents. Members are eligible not only to apply for USAA’s mortgage products but also to take advantage of the Texas-based association’s financial services, which include banking, investing and insurance.
The USAA specializes in Veterans Affairs loans, including VA jumbo loans, in addition to conventional jumbo loans, fixed-rate loans, and conventional 97 loans. In fact, VA borrowers are their largest demographic.
- Because USAA has brick-and-mortar locations in just a few states (Colorado, New York, Maryland and Texas) most borrowers apply online or via phone.
- Borrowers can choose from a variety of loan types including VA, 30-year fixed-rate, jumbo, and conventional 97 loans.
- USAA FICO and loan requirements are in line with Fannie and Freddie standards.
- Available in all 50 states.
What USAA offers
USAA fixed-rate VA mortgages come in 10-, 15-, 20- and 30-year term options. The USAA also offers 30-year jumbo VA loans, which have a lower down payment than non-VA jumbo loans. That’s because the VA entitlement is subtracted from the loan amount and the VA borrower is only obligated to put down 25 percent of that total.
The USAA’s non-VA fixed-rate mortgages only come with 30-year terms. However, the organization’s jumbo loans have both 30- and 15-year options.
The conventional 97 option is USAA’s answer to the FHA loan. Conventional 97 loans allow first-time homeowners to pay a down-payment as low as 3 percent. On top of that, borrowers don’t have to get mortgage insurance. The estimated savings on the mortgage insurance can be up to $100 per month.
Minimum borrower requirements
The borrower requirements for USAA mortgages are in line with Fannie Mae and Freddie Mac as well as the Department of Veterans Affairs (VA) requirements. The minimum FICO score is 620; the minimum loan amount is $50,000 and the maximum is $3 million.
For VA loans, there are no down payment requirements, and for conventional 97 loans, borrowers can put down as little as 3 percent.
How to apply for a USAA mortgage
First, you must be a USAA member to apply for a mortgage. Only men and women who currently serve or have served in the military along with their direct dependents are eligible for USAA membership.
You can apply for mortgage loans and get prequalified online or by phone. If you apply online, you can get prequalified within minutes. If you decide to go forward with loan, then a USAA representative will contact you to verify your information and complete the process. To apply online, visit www.usaa.com and to apply via phone, call 1-866-998-2403.
As a USAA member, applying for a loan is often more convenient than going to a lender who is just meeting you for the first time, explains Paul Brown, director of product management at the USAA, especially when it comes to filling out applications. As a member, you can simply log into your account and choose to automatically fill in your application with information like your name, date of birth, and home address.
“This makes getting prequalified for a mortgage much easier,” Brown says. “We can populate all of this information on their online application, which comes in handy when they’re applying on a mobile device. In three to four minutes, they will know how much they’re prequalified for.”
The USAA will also service the loan, so if borrowers enjoyed the loan process then they can expect to get the same level of attention and care, says Brown.
What fees you will pay
Borrowers will pay a one-point, or 1 percent, origination fee on home loans.
For people who want to refinance, borrowers should consider the VA Interest Rate Reduction Refinance Loan (IRRRL). With the IRRRL, the USAA will pay for the title, the VA funding fee, and the appraisal fee. Additionally, the IRRRL does not include an origination fee, so customers will save there, too.
- First-time homebuyers can save big with the conventional 97 loan, especially since they’re not required to purchase mortgage insurance.
- VA-eligible applicants are not required to make a down payment on conventional fixed mortgages.
- The USAA will connect applicants to their network of real estate agents. As a goodwill gesture, USAA allows all applicants access to their network — regardless of whether or not they get their loan through USAA.
- Borrowers who are interested in FHA or USDA mortgages are out of luck, as USAA does not offer these types of loans.
- USAA does not offer home equity lines of credit.
- There are only physical locations in four states, which might be a minus for people who prefer to do business in person.
What people are saying about USAA
J.D. Power’s 2016 U.S. Primary Mortgage Satisfaction Study shows that USAA received 861 satisfaction points out of a possible 1000, which ranks among the top scorers.
However, some borrowers have expressed their dissatisfaction with USAA on sites like Consumer Affairs. Many of the complaints have to do with customer service issues, such as disorganization and last-minute requests for application information followed by a decision to deny the loan.