The Complete Guide to VA Loan Rates

The Complete Guide to VA Loan Rates

Different lenders offer different mortgage rates, so it’s essential to shop around. To find out what lenders provide at any given time, browse our rate table. You can also research the best VA mortgage lenders on the lenders’ websites to see their current VA interest rates.

Related Article: The Ultimate Guide to a VA Loan

What Is a Good VA Loan Rate?

So, what are VA loan rates and what impacts them? Your credit and financial situation, as well as the economy, affect the rate of your VA loan. If you have a low credit score, you will pay a higher interest rate for a mortgage. A credit score of 620 or higher will help you qualify for a more advantageous VA loan rate, but the VA does not set a minimum credit score requirement.

In addition to your credit score, lenders will also look at your debt-to-income (DTI) ratio. Your DTI is your gross monthly income and the total of your monthly debts, including your new mortgage payment. VA loan lenders typically prefer a DTI ratio of 41 percent or lower.

The economy can also affect the VA loan rate you receive. Rates drop during recessions and generally rise during good economic times.

Related Article: VA Loan Limits By State


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How Do VA Loan Rates Compare With the Rest of the Market?

FHA and conventional mortgage rates tend to be higher than VA loan rates. However, the reason they’re generally lower is because the VA backs a portion of each loan.

What Determines My Rate?

A variety of factors determine VA loan interest rates. In addition to market conditions, VA loan rates are determined by:

  • Credit scores
  • Repayment history of previous loans
  • Duration of the loan (15 or 30 years)
  • The type of loan (purchase, IRRRL, cash-out, jumbo, etc.).

Who Sets VA Loan Rates?

So, who has the best VA home loan rates? Several mortgage companies and banks are available that set interest rates on VA loans. The Department of Veterans Affairs (VA) does not set the rate but guarantees a portion of loan defaults.

How Often Do Rates Change?

Rates for VA loans can change often, sometimes multiple times a day.

Related Article: VA Loan Calculator

Are You Eligible for a VA Loan?

Active-duty and veteran military service members and their spouses can apply for VA loans through the Department of Veterans Affairs. You can use it if you qualify for one of the following:

  • Complete a period of 90 days on active duty.
  • You meet length-of-service requirements, generally 90 days in wartime and 181 days in peacetime.
  • You served for six creditable years or 90 days of active duty in the Selected Reserve or National Guard.
  • You are a surviving spouse who has not remarried after the death of a veteran while in service or from a service-connected disability. Or, you remarried when you were 57 or after Dec. 16, 2003. Those whose spouses are missing in action or prisoners of war may also apply.

Furthermore, if you are discharged for a service-connected disability, you may still qualify even if you don’t meet the length-of-service requirements. There may also be other situations where you are eligible but don’t meet the length-of-service requirement. You can contact the VA for details and to see if your specific situation meets eligibility requirements.

However, if you received a bad conduct, dishonorable, or “other than honorable” discharge, you would not be eligible, although you can apply to the VA to upgrade your discharge status.

Related Article: VA Loan Assumption: An Overlooked Benefit

How Do I Get a VA Loan?

A mortgage application may seem daunting for many borrowers. Nevertheless, it’s simple to get a VA loan if you follow these six steps.

1. Select a VA Approved Lender

VA mortgages can only be originated by lenders approved by the US Department of Veterans Affairs. In addition, some lenders specialize in conventional loans, whereas others specialize in VA loans.

2. Get a Certificate of Eligibility

An experienced lender can help you get the certificate of eligibility. The COE will prove that you meet initial eligibility standards for VA loan benefits.

Related:VA Loan Refinancing Overview

You will need to give your lender information about your military service to get your COE. You can also acquire a COE online via a lender’s portal on VA.org.

3. Pre-qualify for Your Loan Amount

A VA loan professional will talk with you honestly about your income, credit history, employment, and other details to pre-qualify you for your loan. All documents must be reviewed and approved by underwriting before a loan can be finalized.

4. Select a Home and Sign a Purchase Agreement

Borrowers enjoy the fourth step the most because they get to see homes they may be interested in purchasing. You can maximize your VA benefits by working with a real estate professional specializing in the VA process. The VA loan process can begin after you receive a signed purchase agreement.

5. Lender Orders VA Appraisal

Upon receiving the contract, your lender will order the VA appraisal. Your VA appraiser will verify that the amount you’ve agreed to pay for the home corresponds to its current value. Another essential aspect of the VA appraisal is to inspect the home to ensure it meets the VA’s minimum property requirements (VA MPRs). VA appraisals do not replace a home inspection, which focuses on code violations, defects, and property conditions.

6. Finalize the Paperwork and Move Into Your New Home

Once you’ve been approved, selected a home, and ensured that the home meets VA requirements, you can close on your home and move in. You’ll then begin paying back your VA loan according to the terms and rate you were offered.

Related Article: How Many VA Home Loans Can You Have?

What’s the Difference Between a VA Interest Rate and APR?

The annual interest rate is the cost of borrowing money to the borrower expressed as a percentage.

APRs are the cost of a loan to a borrower, including fees, and are also expressed as a percentage. Fees include mortgage insurance, closing costs, loan origination fees, and discount points.

Why the Difference?

The purpose of an APR is to give you a better overall understanding of what you’re paying. Under the Federal Truth in Lending Act, each consumer loan agreement must also disclose the APR. In addition, lenders must follow the same rules to ensure the accuracy of the APR and to compare certain loan costs using the APR.

Consider carefully the rates lenders offer you when comparing them. To get a fair comparison, compare one loan’s APR with another loan’s APR – and compare actual interest rates, too.

Related Article: What Is IRRRL?

Current VA Loan Rates

You can calculate the annualized interest by multiplying the current mortgage balance by the annualized interest. That is the mortgage interest rate. You can then convert the result into a percentage by multiplying it by 100.

Product Interest Rate APR
30-Year Fixed Rate 3.140% 3.300%
30-Year Fixed-Rate VA 2.750% 2.920%
20-Year Fixed Rate 3.020% 3.170%
15-Year Fixed Rate 2.440% 2.670%
7/1 ARM 2.870% 3.980%
5/1 ARM 2.760% 4.070%
10/1 ARM 3.090% 4.040%
30-Year Fixed-Rate FHA 2.660% 3.530%
7/1 ARM Jumbo 3.000% 4.010%
30-Year Fixed-Rate Jumbo 3.130% 3.220%
15-Year Fixed-Rate Jumbo 2.430% 2.500%
7/1 ARM Jumbo 3.000% 4.010%
5/1 ARM Jumbo 2.810% 4.050%

According to a VA loan APR survey, the national average for a 30-year loan was 2.920% on Friday, November 26, 2021. According to Bankrate’s latest survey of the nation’s largest mortgage lenders, the average 30-year VA refinance APR is 2.980%.

VA Loan Rates Matter

For military members, past and present, the VA Home Loan is one of the best available mortgage programs. Not only will you likely receive better rates, but you can also finance 100% of the value of your home if you are a qualified service member.

You served your country. Now take advantage of all the benefits of your service.

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