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- USAA Bank Mortgage Review
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Widely considered one of the best mortgage lenders, USAA maintains a strong reputation for low prices, good service, and generous benefits. USAA is a 98-year-old financial institution that originally only provided auto insurance. It became a bank in 1983, and today serves more than 13 million members.
Although USAA sometimes offers a wider selection of mortgage products, it currently only offers VA loans and conventional refinance loans. USAA constantly evaluates its offerings to fine-tune its products and terms.
Full USAA Bank Mortgage Review
There are many reasons homeowners choose to go with a USAA mortgage. However, this lender isn't right for everyone. Below, we'll go over some of the top perks and things that could be improved with USAA mortgages.
Top perks
Customer satisfaction. USAA often out-scores all other banks in both the JD Power 2020 Primary Mortgage Origination Satisfaction Survey and the JD Power 2020 Primary Mortgage Servicer Satisfaction Survey.
USAA earns an A- from the Better Business Bureau. That means it earned a score of at least 90 out of 100, which says that when people lodge complaints, the company is responsive.
No down payment. The VA mortgage has no down payment requirement. But you will need to contribute some cash toward closing costs for a VA purchase loan.
No origination fee. USAA Bank Mortgage does not charge an origination fee for VA loans.
VA mortgage experts. USAA only serves the military community. Its employees know how to help service members get the right financial product -- they are truly VA loan experts. In addition, USAA members have access to a network of real estate agents who specialize in working with military families.
Lowered interest rates. USAA offers the VA interest rate reduction refinance loan (IRRRL). This program permanently lowers the mortgage interest rate on a VA loan. The borrower pays no origination fee, appraisal fee, or VA funding fee.
Information and education. Between the website and USAA’s knowledgeable staff, borrowers can easily get information about VA loans, eligibility, required borrower paperwork, affordable payments, or anything else related to VA loans.
No PMI. VA loans don’t require private mortgage insurance. However, there is a funding fee on all VA loans.
Fast pre-approval. VA loans from USAA Bank Mortgage are only available to USAA members. If USAA already has the borrower’s financial information (because the borrower is already a customer), pre-approval can happen quickly.
What could be improved
Members only. Not everyone can get a USAA Bank Mortgage. USAA membership is free, but limited to these people:
- Serving members of the military
- Those who have received an honorable discharge from the military
- Pre-commissioned officers
- Eligible family members of the above, including spouses, divorced spouses who haven't remarried, widows, and children
No rate quote tool. Although you can play around with rates and terms for a USAA personal loan on the website, USAA Bank Mortgage rates are not published. The only way to get a personalized rate is through a USAA Bank Mortgage pre-approval.
Minimal loan options available. The USAA Bank Mortgage VA loan is the only loan type available at USAA for people who want to buy a home. The current loan options are:
- VA loan
- VA jumbo loan
- VA IRRRL
- VA cash-out refinance
- Conventional refinance for members refinancing a USAA Bank mortgage serviced by Nationstar Mortgage LLC (USAA’s servicer)
USAA doesn't offer any other loan types. You can't apply for a conventional loan for a home purchase. Also, you can’t get an adjustable-rate mortgage from USAA right now. This is primarily because mortgage rates are low enough that ARMs don’t offer financial advantage over a traditional fixed-rate mortgage. USAA does not offer the USDA loan or the home equity loan.
How to qualify
To qualify, you'll need to provide information about your income, employment, and assets. Much of your application is prefilled based on your member profile. Any asset accounts or debts (such as an auto loan or a personal loan) with USAA will automatically show up. The application process includes a chance to upload any necessary documents.
USAA also needs to know where you want to buy a home, the expected purchase price, and the amount of your down payment.
The three main components of your mortgage application are credit score, debt-to-income ratio, and down payment.
For the conventional refinance loan, you need a FICO® Score of 620 or higher. There is no minimum credit score for the USAA VA loan or the IRRRL. There is also no down payment requirement.
An acceptable debt-to-income ratio for a VA loan is 41% or lower. That means that no more than 41% of your gross pay should go each month to debt payments (like credit card bills and your proposed housing payments).
The VA loan doesn’t require a down payment. However, for a purchase loan, you need to come to the table with 1% to 5% of the loan amount for closing costs. For a VA purchase loan, closing costs can't be rolled into the loan. For an IRRRL, they can.
Additionally, your loan may not exceed 95% of your home’s appraised value. You must retain at least 5% equity in the home.
Alternatives to consider
Rocket Mortgage. If customer service is the most important thing for you in a mortgage lender, give Rocket Mortgage a try. Rocket Mortgage has been ranked number one by JD Power for mortgage origination customer satisfaction for the last 11 years. If you're looking for a conventional mortgage or an FHA loan, Rocket Mortgage offers both.
Navy Federal Credit Union Mortgage. If you want to work with a lender that caters to the military community, give Navy Federal Credit Union Mortgage a call. Like USAA, they are experts when it comes to helping service members and veterans navigate financial products. Navy Federal offers a rate match guarantee that ensures you won’t lose out on a lower interest rate. It also offers conventional loans, but does not currently offer the FHA loan.
USAA Bank Mortgage is right for you if:
With its emphasis on customer service, USAA Bank mortgage can make the potentially stressful mortgage loan process easier. USAA gets top marks -- by a landslide -- for customer service every year. That should tell you that the experience of working with USAA is not just satisfactory -- it’s downright pleasant.
USAA Bank Mortgage is also a smart choice for members who want to refinance a USAA Bank mortgage. Since other lenders charge between 1% and 3% for an origination fee, USAA’s no-origination-fee loan could save you a significant amount. If you’re a member of that special club that USAA serves and you want a very positive home loan experience, USAA might be right for you.
About the Author
Kimberly is a personal finance writer/editor, consumer credit expert, and financial literacy advocate. She has lots of degrees and personal experience that make her really good at helping people separate the good from the bad in financial products and habits. She likes to roller skate. Tweet her @rotterwrites.
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