USAA Mortgage Review 2024

USAA is heavily experienced in providing several different types of VA loan products:

Home Purchase Loan Options

1. VA loan. The VA loan for home purchases is available for current military service members, veterans and eligible surviving spouses. There is no down payment required and you don’t have to get PMI, so this helps you save money on the front end. This type of mortgage loan can be refinanced.
2. VA jumbo loan. The jumbo mortgage product is for eligible borrowers looking to finance a home from $647,200 up to the $3 million. No PMI required and, like other mortgage products, it comes with personalized service from start to finish. There’s also an option of financing into the VA funding fee.

Refinancing Loan Options

USAA offers mortgage refinance products to reduce your interest rate, shorten your loan term and receive cash back at closing:

• VA Interest rate reduction refinance loan (IRRRL). You can refinance up to 100% of the value of your home with the ability to choose from a variety of loan terms. The VA IRRRL process is simpler and requires less paperwork. To be eligible, you must already have a VA loan, use the IRRRL to refi your existing VA loan and can certify that you currently live in or used to live in the home covered by the loan, according to the VA.
• VA cash-out refinance. This option works much like a standard cash-out refinance. You’ll take out a new loan with a larger balance and pay off your existing loan, receiving the difference in cash at closing. With a VA cash-out refinance, you also have the ability to refinance a non-VA loan into a VA-backed loan.
• Conventional refinance. You can do a conventional refinance and get up to 95% of the value of your home financed. USAA says it’s available only to members refinancing a USAA mortgage serviced by Nationstar Mortgage, LLC, a subservicer for USAA. You cannot begin the application process online; you have to call USAA.

General Requirements

It is important to note that just because you are a member of USAA does not mean you are eligible for a VA purchase loan or refinancing.

Requirements vary based on whether you are active duty or a former member of the military, if you served or are serving in the National Guard or Reserve, and when you served. Here are general guidelines provided by USAA:

• Current active-duty members are eligible after 90 days of continuous service during wartime.
• Veterans who served after August 2, 1990 are eligible if they have 24 continuous months of active-duty service with a discharge type other than dishonorable.
• National Guard members and reservists are eligible after 90 days of active service, or six years of guard and reserve service.

You will need to get a VA Certificate of Eligibility (COE) to confirm you have met the service requirements necessary to get a VA loan. You will need one every time you apply for a VA loan. There are a couple of ways to get yours:

• Apply online through the VA’s eBenefits portal
• Apply by mail
• Ask your lender if they can get it for you

Even with a COE, you may need to provide some additional service-related documentation.

Credit Score

The minimum credit score to qualify for a VA loan at USAA is 640.

Credit History

You can check your credit history for free and review your report for mistakes. You should contact the credit bureaus to correct any errors.

Debt-to-Income (DTI) Ratio

The VA does not have a maximum DTI for the loans it guarantees. However, the agency does state that “the lender must provide compensating factors if the total debt ratio is more than 41%.”

USAA writes on its website that “a general rule is to keep home costs, which include mortgage payment, property taxes and insurance, to 25% to 36% of your take-home pay.”

Down Payment

While VA loans don’t require down payments, USAA does caution that one may be required “in certain circumstances,” although it does not indicate what those may be. Check with your USAA loan officer when applying for a loan.

Income

The VA requires that your income is stable, sufficient and reliable, and expected to continue during the foreseeable future. The VA requires lenders to verify a minimum of two years employment. If you have been employed at your current job for less than two years, then the lender must verify your prior employment covering a total of two years.

Closing costs are what you’ll pay before the home purchase or refi is complete. Some of these fees will be paid upfront while others will be due at closing. You will receive a Closing Disclosure a few days before close that outlines all of the costs and fees you’ll need to pay.

USAA does not charge mortgage origination fees for VA loans, VA jumbo loan or the IRRRL.

VA loans do require an upfront, one-time payment called a VA funding fee, collected at closing, and it’s nonrefundable. The fee is determined by the loan amount, your service history and other factors. A down payment on your VA loan may be required in certain circumstances and maximum loan limits vary by county.

The VA funding fee is a one-time fee of 2.3% of the total amount borrowed. The funding fee increases to 3.6% for borrowers who have previously used the VA loan program but can be reduced by putting at least 5% down at closing.

If you are refinancing, it is 2.3% of the total amount borrowed and 3.6% after first use. The VA funding fee rates for refinancing loans will not change based on your down payment amount. If you used a VA-backed or VA direct home loan to buy a manufactured home, you only need to pay the first-time use funding fee.

For a VA IRRRL, USAA Bank covers the appraisal, title and VA funding fees. However, payment of discount points, taxes and insurance, and HOA fees will be your responsibility. USAA’s IRRL has -0.125 discount points, meaning the bank offers a cash rebate to help you lower your closing costs.

Because you pay less upfront, you will pay a higher interest rate for the life of the loan.

There are no discount points offered on USAA’s VA or jumbo VA loans, meaning your closing costs will be lower compared to other loans, but you also won’t be able to lower your interest rate further.

Other closing costs to expect:

• Appraisal fee for the assessment of the home’s market value; these are set by the VA, not the lender, and vary depending on where the property is located
• Recording fee paid to city or county to record your deed and mortgage documents
• Underwriting fee for the cost of reviewing and vetting your application
• Title fees to verify there are no tax liens on the property and for title insurance to protect you if a problem is discovered

You can apply for a mortgage on USAA’s website. The bank will check your credit and, if you get preapproved, provide you a letter with a preapproval amount that you can use for up to 90 days during your search for a home. You also have to get a COE that confirms you are eligible for a VA-backed loan.

Preapprovals can be completed with an initial credit decision rendered within as little as 15 to 20 minutes. Members may move forward with an application and begin providing documentation to receive a conditional loan approval once they have selected a property. The average time for conditional loan approval on purchase applications is five days.

Once you find the home you want to buy, then you have to call a USAA loan officer to get started on your mortgage application and finalize the process.

During the application process, you will need to provide:

• Your most recent month’s pay stub(s)
• W-2 forms showing the last two years of your employment
• Bank and investment account statements from the last three months
• Your home purchase contract signed by you and the seller
• If you are self-employed or you get paid any commissions, expect to provide your most recent two years of tax returns, signed
• If you own your own business, they will need the most recent two years of personal tax returns and any business returns

USAA products and services are only available to U.S. military members, veterans, precommissioned officers, and their spouses and children. To qualify for a USAA mortgage, you have to be a USAA member, married to one or be the child of a USAA member. ​​

When applying for a mortgage loan it’s crucial to select a product and amount that is right for you and your budget. Having an application denied is not the end of the world, even though it might feel that way.

If your application is denied by USAA, you should:

1. Call. The lender is legally required to tell you why you weren’t approved. Any information you can get will be invaluable.
2. Review your credit. If your application was denied because of your credit rating, it’s important to take action now to improve your score. On the flip side, if there were errors in your credit report, submit a dispute through all three credit reporting agencies.
3. Wait. Sometimes the timing of your application might have been the issue. For example, the length of time on your current job, a recent bankruptcy, or a large and unexpected expense that messed with your DTI. In this case, your lender can give you a timeframe for when you can reapply.

As of April 2023, there were 81 mortgage-related complaints filed against USAA over the past three years in the Consumer Finance Protection Bureau’s Consumer Complaints database.

It doesn’t have a rating from the Better Business Bureau (BBB), though the consumer reviews on the site are overwhelmingly negative, mostly about the company’s insurance services.

Whether you want a lender that offers a variety of mortgage products or prefer a lender that specializes in VA loans, there are alternative options to USAA.

Navy Federal Credit Union

Navy Federal Credit Union also works with borrowers that have a military connection. Similar to USAA, potential homebuyers can apply for conventional or VA home loans. Unlike USAA, however, Navy Federal has other military home loan options if you’ve exhausted your VA loan benefits.

Rocket Mortgage

Rocket Mortgage is the largest mortgage lender in the U.S. It offers many different types of mortgages including conventional, jumbo, FHA and VA loans. It also offers a rapid online mortgage application process. While USAA has four physical locations, Rocket Mortgage is 100% online. There’s also no membership requirement.

We graded USAA based on features that have a meaningful impact on the cost of a mortgage and a borrower’s experience, including interest rates, loan options, accessibility, closing time and customer service.

We award bonus points if a lender offers a specialty rate discount or mortgage product, a home equity product or maintains a fully online mortgage application process.

Our scoring method is broken down as follows:

• Interest rate. 20%
• Loan options. 20%
• Time to close. 20%
• Accessibility. 20%
• Customer service experience. 20%
• Bonus points. Up to 25 points

We chose to focus on these core elements to bring forward lenders that offer the most competitive rates while also providing a satisfactory customer experience accessible to borrowers of all financial backgrounds. We believe this scoring system best reflects consumers’ top priorities when comparison shopping for mortgage lenders.

To learn more about our rating and review methodology and editorial process, check out our guide on How Forbes Advisor Reviews Mortgage Lenders.