100% Financing

100% VA Financing vs. 100% USDA Financing

In today's home lending market our countries military veterans are one of two types of buyers who qualify for 100% financing. Besides VA there is the USDA loan program. The difference between the two is that VA is not income or property restrictive and USDA is.

What does this mean?

It means if you are a military veteran you can purchase a home with a VA loan anywhere regardless of how much money you make. With USDA you can only purchase a home in smaller populated towns and rural areas and you are limited to household income plus rates are higher for the loan.

With VA the interest rates are typically the same whether you have 800 credit scores or a 640 credit score. If you have low 600 credit scores you can still qualify for a VA loan but you may have to go with a slightly higher interest rate. This requirement for a slightly higher rate with a lower score is lender specific and not an industry standard so you may get different answers if you call around. Overall, if you have fairly good credit scores you will get a pretty good rate when purchasing a home going VA.

When going VA I mentioned there are no income or property restrictions. This means you can make $45,000 a year or $250,000+ and still qualify for a zero down VA loan. It doesn't matter where the property is located, it could be a condo in downtown Portland, OR or a stick built home in Vancouver, WA or even a home out in the country and you still qualify. The VA loan has essentially the same autonomy as a conventional loan where someone puts 10% as a down payment.

When utilizing a USDA loan there are only certain areas that you can purchase a home which is why it is property restrictive. These areas are in smaller towns or rural areas. The only way to find out where these areas are is to have your lender search the areas that qualify for the program. Each county in each state is different so there is no set rule which is why it must be researched first. The way income restrictions work is exactly the same. It varies from each county and state just like the property restrictions which is why you need to speak to a lender to get you that information. USDA is a good loan program for a lot of people although military veterans will find that a VA loan is a much more flexible and easy loan program.