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in McFarland, CA
Choosing between a conventional loan and a VA loan in McFarland depends on your military service history and financial situation. Both options offer paths to homeownership in Kern County, but they work very differently.
Conventional loans serve the general borrowing public with standard qualification requirements. VA loans reward military service with exceptional benefits, including zero down payment options for eligible veterans and active-duty service members.
Understanding the key differences helps McFarland homebuyers select the mortgage that saves them money and matches their qualifications.
Conventional loans represent traditional mortgage financing not backed by any government agency. Lenders set their own requirements, typically asking for credit scores of 620 or higher and down payments starting at 3% for first-time buyers.
These loans work well for McFarland buyers with solid credit and stable income. You can use them for primary homes, second homes, or investment properties throughout Kern County.
Borrowers who put down less than 20% pay private mortgage insurance until they reach 20% equity. Rates vary by borrower profile and market conditions, with stronger credit typically earning better terms.
VA loans are government-guaranteed mortgages exclusively for eligible veterans, active-duty service members, and certain surviving spouses. The Department of Veterans Affairs backs a portion of each loan, allowing lenders to offer exceptional terms.
The standout feature is zero down payment eligibility for qualified borrowers in McFarland. VA loans also skip monthly mortgage insurance, which saves borrowers hundreds of dollars monthly compared to conventional financing.
You need a Certificate of Eligibility from the VA to use this program. There is a one-time funding fee, but disabled veterans often qualify for exemptions.
The biggest difference is eligibility: anyone can apply for a conventional loan, but only those with qualifying military service can access VA benefits. This makes conventional loans the default choice for most McFarland residents without service history.
Down payment requirements separate these programs significantly. Conventional loans typically require 3-20% down, while VA loans allow zero down for eligible borrowers. That difference can mean $10,000 or more in upfront savings.
Monthly costs also differ substantially. Conventional borrowers with less than 20% down pay PMI, often $100-300 monthly. VA borrowers skip this ongoing expense entirely, though they pay a one-time funding fee at closing.
Property type matters too. Conventional loans work for primary homes, vacation properties, and rentals in Kern County. VA loans must be used for primary residences only.
If you qualify for VA benefits, this loan type almost always makes financial sense for McFarland primary residence purchases. The combination of zero down and no PMI creates significant savings that offset the funding fee.
Conventional loans serve McFarland buyers without military service, those purchasing investment properties, or borrowers who want second homes in Kern County. They also work when you want to avoid the VA funding fee and have sufficient down payment funds.
Some scenarios favor conventional financing even for eligible veterans. Disabled veterans exempt from the funding fee get maximum VA benefits. Those paying the full funding fee with zero down might compare total costs carefully.
Talk with a mortgage broker who can run actual numbers for your McFarland purchase. Small differences in your situation can shift which program saves you more over the loan term.
No, VA loans require you to occupy the property as your primary residence. For rental properties or second homes in Kern County, you need conventional financing or other loan types.
Conventional loans often close slightly faster because they skip VA appraisal requirements. However, experienced lenders can close either loan type efficiently within 30-45 days.
VA loans have no income limits. You need sufficient income to qualify for your specific loan amount, but there are no caps preventing higher earners from using the program.
PMI deductibility changes with tax law and depends on your income level. The VA funding fee can be financed into your loan. Consult a tax professional for current rules.
Yes, if you gain VA eligibility or already had it but used conventional financing initially. The VA Interest Rate Reduction Refinance Loan lets you refinance existing VA loans with minimal paperwork.