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in Merced, CA
Merced buyers have two solid mortgage options: conventional loans and VA loans. Your military service status decides which path makes sense.
Most deals I broker in Merced County split between these two programs. Each has different approval rules and cost structures.
Conventional loans work for anyone with decent credit and income. You'll need at least 3% down, though 20% avoids mortgage insurance.
Credit requirements start at 620, but competitive rates need 700+. Income must support your debt-to-income ratio under 50%.
These loans cap at conforming limits set by Fannie Mae and Freddie Mac. They fund faster than government-backed programs in tight markets.
VA loans are exclusive to veterans, active-duty service members, and qualifying spouses. Zero down payment is the biggest advantage.
You pay a one-time funding fee instead of monthly mortgage insurance. Credit standards are flexible—lenders approve 580 scores regularly.
The VA guarantees part of your loan, which lets lenders offer better rates. You need a Certificate of Eligibility from the VA to start.
Down payment separates these programs most. VA borrowers put nothing down while conventional buyers need at least 3%.
Monthly costs differ too. Conventional loans under 20% down carry PMI that adds $100-300 monthly. VA loans skip monthly insurance but charge an upfront funding fee of 2.3% for first-time use.
Credit flexibility favors VA borrowers. I've closed VA deals at 600 credit that would need 680+ for conventional approval. Rates vary by borrower profile and market conditions.
If you're military-eligible, VA wins on affordability. Zero down and no PMI save thousands compared to conventional financing.
Choose conventional if you're not VA-eligible or buying an investment property. VA loans only work for primary residences.
Some Merced sellers prefer conventional buyers because VA appraisals are stricter. If you have 10%+ down and strong credit, conventional can close faster and negotiate better.
Yes, VA loans work throughout Merced County for primary residences. The property must meet VA appraisal standards for safety and condition.
VA loans typically offer rates 0.25-0.50% lower than conventional. Rates vary by borrower profile and market conditions.
No monthly mortgage insurance. You pay a one-time funding fee of 2.3% that can roll into your loan amount.
Yes, conventional loans allow 3% down for primary residences. You'll pay PMI monthly until you reach 20% equity.
Conventional loans often close 3-5 days faster. VA appraisals require extra inspections that can extend timelines in older Merced properties.