USAA Mortgage Review: Zero Down Payment Loan Options with High Monthly Payments

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USAA Mortgage Review: Zero Down Payment Loan Options with High Monthly Payments

The United Services Automobile Association (USAA) offers mortgages that are best for existing members seeking loan options with zero down payment and few fees, but when compared to many lenders, USAA's loans are not the most cost-effective.

Good for

  • Existing members of USAA
  • No down payment on VA loans
  • First-time homebuyers

Bad for

  • Not available to non-members of USAA
  • FHA, USDA loans and home equity lines of credit (HELOCS) are not available
  • Few brick-and-mortar service locations

Editor's Rating


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We recommend USAA mortgages for existing members and VA loan applicants who qualify for zero down payment mortgages. Although you'll likely find other lenders with lower interest rates and monthly costs, USAA stands out by providing well-supported, comprehensive services. USAA not only originates mortgages, but also services its own loans and offers a cash-back reward if you choose a real estate agent from its network.

USAA Mortgage Review: Zero Down Payment Loan Options with High Monthly Payments

USAA mortgages are best for existing members who want to buy a house but cannot afford a down payment of 3% or more. Although a USAA home loan allows borrowers to purchase a home with no money down, these loans have high monthly payments compared to mortgages at other lenders. USAA's one advantage is its VA loans, which require no down payment or private mortgage insurance premiums.

If you're already a USAA member, pre-qualifying for a loan can take a few minutes—a process which could take days with a lender that has no prior information on your background. In addition to a faster application, USAA provides access to a real estate agent network specialized in finding homes for military families. Using its network of real estate agents can qualify you for cash back on your USAA mortgage fees, up to $24,000.

On the other hand, USAA doesn't necessarily stand out among its competitors in terms of cost. While it makes sense to choose USAA if you need a zero down payment option or need guidance on buying your first home, its mortgage rates are quite high and much of the application process takes place over the phone. There are many other options for getting a home loan which are cheaper or more convenient.

How Do USAA Mortgages Compare?

Despite USAA's various mortgage options, you may want to consider shopping around for other lenders if you prefer lower interest rates, additional brick-and-mortar locations, or better online services. Below, we compared USAA to three different types of lenders that offer VA loans using rates based on a 30-year fixed-rate VA mortgage. The lenders include a military credit union, an online alternative lender, and a traditional bank.

30-Year Fixed-Rate VA Mortgage Estimates

USAA MortgageNavy FederalQuicken MortgageWells Fargo
Interest Rate4.25%3.63%4.25%4.50%
Monthly P+I$1,107$1,026$1,131$1,047

Estimates for a loan amount between $200,000 and $225,000 with a 0% down payment and credit score of 740.

USAA has interest rates that are somewhat similar to other lenders, but one of its competitors for military services—Navy Federal Credit Union—stands out with the lowest interest rates and monthly payment. Thus, in terms of payment, USAA is not the most low-cost, but may be a good choice to consider if you are already a member. As a result of the relationship already built with the company, qualifying is fast and simple with services to support you during the whole process. There is still a trade-off of paying higher rates for arguably better service.

30-Year Fixed-Rate VA Mortgage Refinance Estimates

USAA MortgageNavy FederalQuicken MortgageWells Fargo
Interest Rate4.25%3.63%4.25%4.50%
Monthly P+I$1,107$1,026$1,131$1,047

Estimates for a loan amount between $200,000 and $225,000 and credit score of 740.

Based on the regular VA loan, USAA would not be the best option for a refinance due to the high rates—unless you qualify for a VA Interest Rate Reduction Refinance Loan (IRRRL), for which USAA charges no origination fee and covers the VA funding fee, title, and appraisal. Refinancing your mortgage using a regular VA loan has the same interest rate as buying a home with USAA but an even higher annual percentage rate (APR). Most times refinancing is used to consolidate and save money, meaning that interest rates should be lower than the purchasing interest rates. However, using a IRRRL can save members over $2,000 and if you are already a member of USAA and want to keep the process simple, USAA would be one of the most cost effective and convenient choices.

Customer Service and Mortgage Servicing

USAA is highly rated for their customer service but in recent months, there have been quite a few complaints online criticizing its services. Still, many customers are very content with the company and use it for all types of financial services. USAA loans are suited best for military personnel and their spouses who can't afford a down payment on a house and first-time homebuyers who need guidance on buying a home. Mortgage products tend to require a lot of support so having a company that offers helpful service is a huge plus when looking for lenders.

Mortgage-Related Complaints at VA Lenders, 2013-2017

CompanyMortgage OriginationsCFPB ComplaintsRatio of Complaints2017 JD Power Rating
USAA Mortgage294,5494080.14%889
Navy Federal265,3754480.17%811
Quicken Mortgage1,725,7741,2840.07%823
Wells Fargo2,519,85826,4561.05%808

USAA is rated the highest out of the lenders we compared by JD Power and has the second-fewest CFPB complaints relative to the number of mortgages the company has issued. However, Quicken Mortgage has half the ratio of complaints with over five times the number of originations that USAA had. If customer service is a priority for you, USAA is definitely a good choice that offers a lot of support for its borrowers. However, good service doesn't necessarily justify higher rates. If USAA's phone-based service is problematic for you, consider other lenders with full online capabilities or more brick-and-mortar locations.

Home Loan Products at USAA Mortgage

The USAA provides both conventional and VA loans with multiple loan term options for home purchases and refinances. Below, we have compiled the rates offered by the USAA for different loan types. In addition to these options, USAA offers loans to help those that want to buy or refinance a vacation or investment property and jumbo loans for conventional and VA loans.

Mortgage ProductInterest RateAPRPoints
30-year Fixed-Rate4.38%4.53%0.38
20-year Fixed-Rate4.13%4.42%1.00
15-year Fixed-Rate3.63%3.94%0.63
10-year Fixed-Rate3.63%1.14%0.75
30-year Fixed-Rate Conventional 97 Loan5.00%5.18%0.50
30-year Fixed-Rate VA Loan4.50%4.71%0.13
20-year Fixed-Rate VA Loan4.38%4.73%0.63
15-year Fixed-Rate VA Loan4.00%4.41%0.38
10-year Fixed-Rate VA Loan3.88%4.51%0.63
5/1 ARM3.63%3.97%0.88

Although the company offers many mortgage products, as far as mortgage interest rates go, USAA is not very competitive in relation to other lenders, especially if you factor in the effects of discount points that lower your interest rate in exchange for extra payment up front. Unfortunately, the general website doesn't allow you to tailor the assumptions to your needs and instead displays current mortgage rates based on their assumptions.

The best way to find rates for a USAA loan is to pre-qualify on the USAA website to give you an estimate of how much you can borrow based on your financial information. If you qualify for USAA membership and are not finding many loan options, sign up for an account to compare rates. Using the service probably won't be better in terms of payment than many traditional banks or alternative lenders but it doesn't hurt to see what you qualify for.

Where Can You Get a Mortgage with USAA Mortgage?

USAA mortgages are available in all 50 states and District of Columbia but there are only four brick-and-mortar locations. Currently, securing a mortgage from USAA cannot be solely completed online and mostly takes place over the phone. Unless you are near a USAA brick-and-mortar location, USAA might not be the most available mortgage provider.

States with Brick-and-Mortar USAA Mortgage Locations

  • Colorado
  • Maryland
  • New York
  • Texas

Comments and Questions

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