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in Tracy, CA
Tracy buyers face a clear fork in the financing road. If you qualify for both a conventional loan and a VA loan, the right choice depends on your cash position and long-term plans.
Both options work well for Tracy's single-family homes and newer construction. The difference comes down to upfront costs, ongoing fees, and equity requirements.
Conventional loans require at least 3% down for most buyers. You'll pay private mortgage insurance (PMI) until you hit 20% equity, which adds $80-200 monthly on a typical Tracy home.
Credit requirements start at 620, but competitive rates need 680 or higher. These loans work for primary homes, investment properties, and second homes without restriction.
Conventional financing closes faster than government loans in most cases. Sellers prefer them because appraisals are less strict and there's no VA inspection requirement.
VA loans let eligible veterans and active military buy with zero down. You pay a one-time funding fee (1.4-3.6% of loan amount) instead of monthly PMI, which can be rolled into the loan.
Credit requirements are more flexible than conventional. Most lenders approve VA loans at 580-600 credit, though rates improve above 620.
VA loans require properties to meet minimum property requirements (MPRs). Appraisers flag issues like peeling paint or missing handrails that conventional appraisers might ignore.
The funding fee versus PMI trade-off matters most. On a $500K Tracy home, you'd pay $7,000 upfront for VA funding fee or $150/month for conventional PMI until you refinance or hit 20% equity.
VA loans only work for primary residences. You can't use VA financing for investment properties or second homes, while conventional loans have no such restriction.
Conventional loans cap at conforming limits ($766,550 in San Joaquin County for 2024) unless you go jumbo. VA loans have the same limit but let you exceed it with a down payment on the excess.
Use VA if you qualify and plan to stay 5+ years. The funding fee pays for itself when you avoid monthly PMI, especially if you're buying with zero down.
Choose conventional if you're buying investment property, need a faster close, or the home has condition issues a VA appraiser would flag. Also consider conventional if you have 10-20% down and plan to sell within 3-5 years.
Tracy's newer developments work equally well for both loan types. Older homes east of I-205 sometimes have deferred maintenance that complicates VA approval but clears conventional underwriting.
Yes, you can put money down on a VA loan. It reduces your funding fee and your monthly payment, but most borrowers skip it to preserve cash.
VA loans typically price 0.25-0.5% lower than conventional. Rates vary by borrower profile and market conditions.
PMI cancels automatically at 78% loan-to-value. You can request cancellation at 80% if you've made on-time payments.
Sellers can reject any offer. VA loans sometimes face resistance due to stricter appraisals, but strong offers still win.
The seller can make repairs, you can switch to conventional, or you walk away. VA gives you an out if the property doesn't meet standards.