Real Estate

VA Mortgage Rates | 2021 Guide to Lowest VA Mortgage Rates


VA mortgage rates today

VA loan rates are the lowest of any major loan program on average.

How low are they?

Today’s 30–year fixed VA loan interest rates start at % (% APR), according to our lender network. Compare that to % (% APR) for a conventional loan.

Your rate might differ, but VA loans are available at low rates even to those without a perfect credit history.

Check your VA loan rate. Start here (Nov 21st, 2021)


In this article (Skip to…)


Your best VA mortgage rates right now

Because they are guaranteed by the Department of Veterans Affairs, VA loans offer exclusively low rates to eligible service members, veterans, and their spouses.

Keep in mind, your own rate could be different from the rates shown below depending on your credit score, down payment, and other factors. But if you qualify for a VA loan, you’re likely to get a lower rate than similar borrowers with different loan types.

Be sure to shop with at least three VA–approved mortgage lenders to find the best VA mortgage rate for your situation.

Loan typeToday’s average rates*
VA 30-year fixed-rate% (% APR)
Conventional 30-year fixed-rate% (% APR)
VA 15-year fixed-rate% (% APR)
Conventional 15-year fixed-rate% (% APR)

*Average rates assume 0% down and a 740 credit score. See our full loan VA rate assumptions here.

Lock in your VA loan rate today. Start here (Nov 21st, 2021)

VA loan rates beat conventional and FHA rates

For years, VA home loan rates have undercut those offered by conventional and FHA loan programs.

As an eligible veteran or active service member, you have access to below–average rates, whether you are buying or refinancing a home.

Find your lowest VA mortgage rate. Start here (Nov 21st, 2021)

Why are VA interest rates so ridiculously low?

Strong government backing means lenders can offer rock–bottom interest rates with very little risk. And, they don’t require a down payment or private mortgage insurance.

VA loan rates offer the best value in the marketplace today, and a fantastic benefit for our nation’s veterans and active duty service members.

Really? No down payment or PMI?

Besides lower interest rates, VA loans offer two other big benefits:

  • You don’t have to put anything down when purchasing a home
  • There is no monthly mortgage insurance

If you compare a VA loan with an FHA loan, the no–mortgage–insurance rule alone saves you around $220 per month when buying a home worth $320,000.

VA loan calculator with rates

Curious how much your monthly mortgage payments would be at today’s VA loan rates? Plug in your purchase price and rate to find out.

How do I find the best VA mortgage rates?

There are really just three factors that determine your current VA rate. The current market rate, the lender, and you.

Market rates

Today’s home buyers and refinancers are in luck. CurrentVA loan rates are close to the lowest in history at the time of this writing.

Borrowers in previous generations could not have imagined 30–year fixed mortgage rates in the high 2s or low 3s, but today they’re not only a reality – they’re quite common.

Mortgage lenders

This requires some homework. Don’t accept the first VA loan rate you are offered. You don’t know if that’s a good interest rate until you compare it with two or three other lenders.

Call a few lenders – all on the same day – and get written quotes. Compare the rate and fees. Don’t accept an ultra–low mortgage rate in exchange for thousands in closing costs.

Getting multiple mortgage quotes or Loan Estimates gives you a chance to see which lenders offer the best rates on your mortgage loan, combined with the lowest origination fees.

Some lenders, for example, quote rates based on discount points you’d have to buy upfront at closing.

More about how to find a reputable VA lender below.

You: The borrower

Your loan profile will have a big impact on your rate.

Do you have a good credit score? Solid income? Low debt–to–income ratio? Then you shouldn’t have any problem getting approved for low VA mortgage rates.

But if you have fair or poor credit, expect to receive a higher rate.

Your VA mortgage rate affects the costs of borrowing. Higher rates mean higher monthly mortgage payments and more interest paid over the life of the loan.

The good news is that VA lenders are lenient on credit scores, and even a high VA loan rate could be lower than an average conventional or FHA rate. They call this the “VA home loan benefit” for a reason!

Check your VA loan rates. Start here (Nov 21st, 2021)

VA home loan rates sound amazing. Am I eligible?

To get access to VA home loan rates, you have to be eligible for the loan itself.

You are likely eligible if you have served:

  • On active duty between 90 days and two years, depending on service dates
  • In the National Guard or Reserves for at least six years

You also must have received an other–than–dishonorable discharge.

The best way to know if you’re eligible is to receive a Certificate of Eligibility (COE). This is not a loan approval, but a document that shows lenders you are eligible for the program.

Most lenders can get a COE for you in minutes, but if you feel more comfortable going through the Department of Veterans Affairs itself, you can request one via the eBenefits website.

In either case, you may need your Form DD214 to prove service history.

Check your VA loan eligibility. Start here (Nov 21st, 2021)

What’s the minimum VA loan credit score?

In our survey of top VA lenders, we found a wide variance in minimum credit scores for VA loans.

The lowest minimum score was 550. The highest: 620.

The VA does not set a minimum score itself. It lets the lender set its own credit requirements.

If you’ve been denied due to a low score, shop around with different mortgage lenders. You might be surprised that you can easily be approved at one lender but not another.

Finding the best VA mortgage lenders

VA mortgage rates can vary based on the lender you choose.

The lender will also determine the ease with which you secure the loan.

There are hundreds of VA lenders across the U.S., so how do you pick the right one – one with great rates and service?

Start with VA loan specialists

Referrals from friends are a good starting point. Our review of top nationwide VA lenders might help, too. Choose a lender and loan officer that does a lot of VA loans – you don’t want someone who is going to forget a crucial step or gets “stuck” on a unique aspect of your loan file.

Select at least two or three top lenders and get a written quote (ask for a “Loan Estimate“) from all the lenders on the same day. Compare rates and fees.

Lowest rates or lowest upfront fees?

You will have to decide which is more important to you: the lowest rate or the lowest fees. Paying fewer upfront fees usually results in a higher rate.

Or, you can choose a below–market rate and pay more upfront for it. This strategy should pay off over the life of the loan if you stay in the home for decades.

Compare loan estimates from each lender

Whatever your strategy, compare Loan Estimates from each lender. Sometimes, you can use one lender’s quote to negotiate rates or fees from another lender. You’d be surprised at how much room a lender has to alter their first quote.

Sometimes you can get an ultra–low rate and eliminate many fees, just by negotiating.

The VA loan process

Your process will differ based on the type of VA loan you’re looking for.

VA loan refinance

If you have a VA loan and want to reduce your rate, you’ll likely qualify for a VA Interest Rate Reduction Refinance Loan, aka IRRRL.

VA loan IRRRL rates are ultra–low, and if you last purchased or refinanced in the last few years – or even before that – you could likely save a lot on interest.

You don’t need a home appraisal, income documentation, or bank statements. The VA says you don’t even need a new credit report (though most lenders will pull one). The main requirement is that you lower your rate and payment enough that it benefits your situation.

You simply apply with a lender and provide a few details. You don’t have to go through the lender that currently holds your mortgage.

Probably a few weeks later, you sign final loan documents and close on the new loan with a lower rate and payment.

Get today’s low VA IRRRL rates. Start here (Nov 21st, 2021)

VA home purchase loan

Home buying with a VA loan is a lot more complex than getting a VA refinance. But it’s well worth it considering today’s low VA interest rates.

The first step is getting pre–approved with your VA lender of choice. With the pre–approval letter, you can make an offer on a home.

Once you find a home, the lender will request an appraisal. While that is being completed, turn in income, asset, and credit documents to your lender.

With a clean file, you could be a homeowner within 30–45 days, but longer if you have damaged credit or questionable income.

For an in–depth look at buying a home with a VA loan, see our guide.

Should I get a VA loan? I heard the VA funding fee was too expensive

Some will tell you to avoid VA loans because of the VA funding fee. Here’s what you need to know about VA funding fees:

  • 2.3% of the loan amount for first–time VA loan users with zero down
  • 3.6% for repeat users
  • 0.5% for streamline refinances

Most home buyers will pay a VA funding fee of $5,750 for a home price of $250,000 with no down payment.

At first, that sounds like a lot, but it’s reasonable given the benefits of the program.

Most non–VA home buyers must come up with a 3% to 5% down payment. That’s at least $7,500 on the same home – a big hurdle, especially for first–time homebuyers.

You can wrap the VA funding fee into the loan amount, meaning it can still be a zero–out–of–pocket loan. With a conventional or FHA loan, you must make the down payment in cash.

Making a down payment is the single biggest barrier to homeownership for buyers today.

Monthly mortgage insurance (PMI) is also eliminated with a VA loan.

The average home buyer will spend about 1% of the home loan amount per year on private mortgage insurance. Over five years, that’s about $12,500 for a $250,000 loan amount.

Sure, the VA funding fee isn’t cheap. But it lets you buy a home now and reduces your monthly payment significantly.

Perhaps the only reason you would consider a non–VA loan is if you already had 20% down and great credit.

I also heard home sellers don’t accept buyers who use VA loans

Honestly, this does happen.

But it also happens to buyers who use any type of financing. Someone with a bigger down payment or an all–cash offer usually beats someone using a larger loan.

This is where your real estate agent comes in. It’s their job to educate the seller and their agent that VA loans are no more difficult than other loan types.

It is true that VA appraisers can be a bit more picky about the property. But the minimum property requirements are not that much more stringent than those of FHA or conventional loans.

VA loan rates FAQ

What is the interest rate on a VA loan?

VA loan rates vary by lender and applicant. A well–qualified VA loan applicant might qualify for a rate under 3% based on recent data from our lender network.

Are all VA loan rates the same?

No. VA loan rates change daily due to market conditions, and vary by lender. Additionally, your credit score and other loan characteristics will change your VA loan rate. Even though the VA loan program is set up by the government, VA loan rates are not “set” by any agency, but by current market conditions. Your loan term will also influence rates. A 15–year VA loan normally offers a lower rate than a 30–year VA.

How does a VA loan work?

A VA loan is a government–sponsored program, but it is not administered by the U.S. Department of Veterans Affairs or any other government agency. Private mortgage lenders accept applications, then approve loans based on rules published by the VA. The process is very similar to that of any other loan program. When buying, you will apply, supply documentation, get approved, find a home, sign final loan documents, and close on the loan. For a refinance, the VA offers a program called the IRRRL, in which you need almost no documentation and no appraisal. So the process is much faster.

Who qualifies for a VA loan?

There are two main criteria to qualify for a VA loan. The first is to be eligible based on your military service. The second is to qualify for the loans itself based on lending requirements. Typically, those who served 90 days to two years (depending on service dates) are eligible for the VA loan benefit. Surviving spouses may also be eligible. To qualify for the loan, you usually need a 620 or higher credit score, and enough steady income to cover future housing payments, other debts, and living expenses.

How many times can you use a VA loan?

Usually, you can use a VA loan as many times as you want, as long as your previous VA loans were in good standing and are now paid off. When you pay off a VA loan or refinance it with a different loan type, your entitlement is restored. You can use that entitlement again on another primary residence. You also may be eligible to have two VA loans at once if your first purchase price was low and you have remaining entitlement. Keep in mind that you will pay a higher funding fee for the second and subsequent uses of your VA loan benefit.

What about a VA cash-out refinance loan?

The VA loan program does offer a cash–out refinance option. This lets you tap your home’s equity and take some of it out as cash, while replacing your current mortgage with a new one. One big perk of the VA cash–out refi is that it’s the only major refinance program that lets you finance 100% of your home’s value, so you can withdraw all your available equity. You do not need a current VA loan to use the VA cash–out refinance.

Do VA loan options include an ARM?

Yes, you could get a fixed–rate mortgage or an adjustable–rate mortgage (ARM) with VA backing. Adjustable rate mortgages tend to offer lower interest rates during their introductory period. After that, your interest rate can change each year. For some active duty service members who plan to sell their home within a couple years, an ARM may offer an attractive loan option.

Can I use a VA loan to purchase an investment property?

No, the VA home loan benefit exists to help qualifying veterans and their families buy a home to live in. You cannot use a VA loan to purchase a vacation home, rental property, or property you plan to use for business. You can, however, use a VA loan to buy a home with multiple units, as long as you plan to live in one while renting the others out The VA also allows you to refinance an investment property with a new VA loan, as long as you can prove you purchased the home as a primary residence and lived there for a reasonable amount of time.

Does the VA set maximum loan limits for borrowers?

No, the VA loan program does not have a maximum loan limit. Buyers can theoretically get a loan of any size with no down payment – although, the borrower must still qualify for the loan based on credit, income, and debt levels.

Do credit unions offer VA loans?

Yes, all sorts of lenders have authorization to provide VA loans. In fact, some of the nation’s leading VA lenders are credit unions, including Navy Federal Credit Union. We recommend working with a lender that specializes in VA loans. VA loan specialists know the nuances of the VA loan program and its eligibility requirements. They’ll help you navigate the process smoothly and work out any snags that come up.

VA mortgage rates: The bottom line

Mortgage rates are low everywhere, but VA rates undercut even the lowest rates of other programs.

Take advantage of this benefit. While your VA benefit never expires, rates this low might.

Secure your rock–bottom VA mortgage rate while it’s available.

Show me today’s rates (Nov 21st, 2021)



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *