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in Sacramento, CA
Sacramento homebuyers face a critical choice between conventional and VA loans. Your military service status often determines which path makes the most financial sense.
Conventional loans serve the general public with standard lending requirements. VA loans reward military service with unique benefits like zero down payment and no mortgage insurance.
Understanding these differences helps Sacramento buyers secure the right financing for their situation. Both options have strengths that match different borrower profiles.
Conventional loans follow standards set by Fannie Mae and Freddie Mac. They require credit scores typically above 620 and down payments starting at 3% for first-time buyers.
These mortgages work well for Sacramento buyers with strong credit and savings. Borrowers putting down less than 20% pay private mortgage insurance until reaching 20% equity.
Conventional loans offer flexibility in property types and loan amounts. They suit buyers who don't qualify for government programs or prefer traditional financing paths.
VA loans serve eligible veterans, active-duty service members, and qualifying spouses. The Department of Veterans Affairs guarantees these mortgages, reducing lender risk.
Sacramento military families benefit from zero down payment requirements and no monthly mortgage insurance. This combination creates substantial savings compared to other loan types.
VA loans charge a one-time funding fee instead of ongoing insurance premiums. Veterans with service-connected disabilities receive funding fee waivers, further reducing costs.
The down payment gap separates these options dramatically. Conventional buyers need at least 3% down, while VA borrowers can finance 100% of the purchase price.
Mortgage insurance creates another major distinction. Conventional loans require PMI below 20% down, but VA loans eliminate this monthly expense entirely for eligible borrowers.
Credit requirements favor VA loans for Sacramento buyers with average credit. VA programs accept scores around 580-620, while conventional lenders prefer 640 or higher for best terms.
Eligibility determines access to each program. Anyone meeting financial qualifications can pursue conventional financing, but VA loans require military service credentials.
VA loans make clear financial sense for eligible Sacramento military families. The zero down payment and no mortgage insurance create powerful advantages that conventional loans cannot match.
Conventional loans serve Sacramento buyers without military service or those purchasing investment properties. They also work when VA entitlement has been exhausted on another property.
Some borrowers qualify for both but choose conventional to preserve VA entitlement for future use. Others prefer avoiding the VA funding fee if they have substantial down payment savings.
Sacramento's military community near McClellan and Mather should explore VA options first. The long-term savings often outweigh conventional loan benefits for eligible service members.
No, VA loans require you to occupy the home as your primary residence. Investment properties need conventional or other financing options.
The funding fee ranges from 1.4% to 3.6% of the loan amount based on down payment and service type. Veterans with service-connected disabilities are exempt.
Rates vary by borrower profile and market conditions. VA loans often feature competitive rates similar to or better than conventional options for qualified veterans.
You cannot convert loan types, but eligible borrowers can refinance from conventional to VA. This requires a new loan application and closing process.
Both typically close in 30-45 days. VA loans require additional certificate verification, but experienced lenders handle both efficiently in similar timeframes.