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in Gustine, CA
Gustine buyers choosing between conventional and VA loans face a clear choice: down payment flexibility versus zero down. Veterans get unmatched terms through VA loans, while conventional financing works for anyone with solid credit and 3-5% saved.
Most Gustine purchases in Merced County close with one of these two programs. Your military status determines whether VA is available, but understanding both helps you maximize your buying power in this Central Valley market.
Conventional loans are standard mortgages not backed by government insurance. You need 620+ credit and can put down as little as 3% on your first home, though 5-20% is more common in Merced County.
With 20% down you avoid PMI entirely, which cuts your monthly payment significantly. These loans hit conforming limits at $806,500 for 2025, covering most Gustine properties with room to spare.
VA loans eliminate down payments for eligible veterans, active military, and qualifying spouses. You pay a funding fee instead of PMI, and that fee gets rolled into your loan amount.
VA allows higher debt ratios than conventional and doesn't require perfect credit. Gustine veterans use these to buy without draining savings, keeping cash available for home improvements or reserves.
Down payment splits these programs hardest. VA requires nothing upfront while conventional needs 3-20% saved. A $400,000 Gustine home means $0 down with VA versus $12,000-$80,000 with conventional.
Monthly costs differ too. Conventional charges PMI until you hit 20% equity, usually $150-300 monthly on Gustine purchases. VA has no PMI but charges an upfront funding fee that increases your loan balance and payment slightly.
Use VA if you qualify. Zero down and no PMI beat conventional on nearly every Gustine deal, especially for first-time buyers without large savings. The funding fee costs less than years of PMI payments.
Choose conventional when VA isn't available or you're buying investment property. Conventional also makes sense if you have 20%+ down saved and want to avoid the VA funding fee entirely. For Gustine buyers with limited military eligibility, conventional is your default path.
VA requires homes to meet minimum property standards at closing. Major repairs must finish before you can use VA financing on distressed Gustine properties.
Conventional typically requires 620+ while VA works with 580-600 depending on the lender. Both benefit from higher scores through better rates.
Both close in 25-35 days typically. VA requires a property appraisal that can add 3-5 days versus conventional timelines.
Veterans with service-connected disabilities are exempt from the funding fee. First-time VA users pay 2.15% with zero down, lower than subsequent uses.
Conventional caps debt-to-income around 45-50% while VA allows up to 60% with compensating factors. VA offers more flexibility for higher debt loads.