How VA Mortgage Rates Are Set

VA loans help military service members, veterans and their families buy homes. Often, they have more favorable terms than conventional mortgages, including no down payment and better interest rates.

Are you considering a VA loan for your next home purchase? Keep reading to see the current VA mortgage rates, along with some additional information on how to qualify for this type of government-backed loan.

What Are VA Mortgage Rates Today?

To view the most up-to-date 30-year fixed VA mortgage rate, visit our purchase mortgage rates page or our refinance rates page.

VA Loan Overview

A VA loan is a type of non-conforming mortgage that’s guaranteed by the Department of Veterans Affairs and designed to help those with military service histories buy homes at better rates than conventional mortgages. The loans are issued by private lenders like local banks, credit unions and Rocket Mortgage®.

Unlike conventional mortgages, not everyone is eligible to apply for a VA loan. Only qualified veterans, active-duty service members, current and former National Guard and Reserve members and their surviving spouses are eligible for a VA loan.

Proving Eligibility

If you’re interested in taking out a VA loan, you’ll first need to apply for a Certificate of Eligibility (COE) through the U.S. Department of Veteran Affairs. This will show your lender that you qualify based on your service history. You can apply for a COE online or by mail.

The Property Must Meet Minimum Requirements

Once you’ve obtained your COE and qualified for a VA loan, you’ll also need to ensure that the property you’re looking to buy can be purchased with a VA home loan. There are certain restrictions on the types of property you can purchase with a VA loan to ensure that current and former service members are living in homes that are safe and sanitary.

Some of the requirements for VA loans include:

• All mechanical systems must be safe and in good condition.
• The property must have proper and functioning heating.
• The roof should be in good repair.
• Basements and crawl spaces must be dry.
• There are no active termite infestations on the property.
• Any lead-based paint must be removed, or the original surface covered and painted if the paint cannot be removed.
• The home should be free of mold, mildew, rot and any other severe structural defects.

Additionally, the home you purchase with a VA mortgage must be purchased as your primary residence. VA loans aren’t available for vacation homes or rental properties.

Who Sets VA Home Loan Interest Rates?

While the Department of Veterans Affairs regulates and guarantees VA loans, it doesn’t set VA mortgage rates. Instead, each VA loan lender sets its own rates.

Because each lender sets its own rates, they’ll view your application in different ways. One may offer you a low interest rate while another may offer you a significantly higher rate. The best way to see a lender’s current rates is to seek mortgage preapproval from them. This will give you an idea of what interest rate you might be eligible for and can make it easier to compare different VA mortgage interest rates from different lenders.

How Are VA Home Loan Rates Determined?

Mortgage rates can fluctuate often, and the rate that one borrower is eligible for may not be available to someone else.

There are several external factors that affect mortgage rates, including the current state of the economy and actions taken by the Federal Reserve and appetites in the bond market. There are also internal factors that affect a borrower’s interest rate. One of the most important factors is a borrower’s credit score. Generally, borrowers with credit scores above 740 are eligible for the best rates. Other personal factors that affect your mortgage rate include your the size of your down payment.

While VA loans don’t require a down payment, borrowers may qualify for a lower rate if they choose to put down some money upfront. There can also be pricing adjustments based on the loan amount itself.

Finally, the loan term you choose will impact your VA loan. In general, 15-year loans tend to offer lower interest rates than 30-year loans.

VA Home Loan Vs. Conventional 30-Year Fixed Mortgage Rates

A conventional mortgage – the most common type of home loan – isn’t backed by a government agency and is open to everyone regardless of their military service history. Like VA loans, conventional mortgage requirements are set by the lender and can vary based on your credit score, down payment amount and debt-to-income ratio. However, most qualified current and former military service members are able to get a better interest rate on a VA loan than a 30-year fixed-rate mortgage.

When you compare a VA loan to a conventional loan, you’ll see that VA home loan rates tend to be between 0.25% and 0.42% lower than conventional mortgages. The lower your interest rate is, the more money you’ll save over the life of the loan.

Pros And Cons Of VA Home Loans

VA home loans come with serious advantages to eligible borrowers, but they’re not without their downsides. Here’s what you need to know so you can choose the right type of home loan for your needs:

Pros

• Low interest rates: Interest rates may be lower than what you’d receive with a conventional mortgage.
• Certain requirements are easy to meet: Underwriting and credit requirements are easier to meet.
• No down payment: There’s no down payment required with a VA loan.
• No insurance required: If you forgo a down payment, you aren’t required to take out primary mortgage insurance.
• Ability to refinance: Current homeowners who are eligible may be able to refinance their conventional mortgage into a VA loan and earn a lower interest rate.
• Loose DTI requirements: VA loans allow for a higher DTI than conventional mortgages.

Cons

• Strict eligibility requirements: VA Loans are only for qualified veterans, active-duty service members, current and former National Guard and Reserve members and their surviving spouses.
• Meant for primary residences: VA home loans cannot be used to purchase second homes or investment properties.
• Must pay closing costs: Borrowers still must pay closing costs on the loan based on the loan amount and their down payment.
• Must pay the funding fee: Borrowers must pay the VA funding fee on top of other closing costs.
• Need to find the right lender: Not all lenders offer VA loans, meaning borrowers may have a hard time finding a mortgage.

FAQs About VA Mortgage Rates

Now let’s go over some of the most frequently asked questions about VA mortgage rates.

Are VA mortgage rates better than conventional loan rates?

VA mortgage rates are usually between 0.25% and 0.42% lower than conventional loan rates, which is why eligible borrowers are typically able to obtain a better rate with a VA loan than a 30-year fixed-rate mortgage.

Can I lower my interest rate by refinancing my VA loan?

A VA Streamline refinance is a simple refinance loan that allows VA loan borrowers to replace their home loans with a new one, often with a lower interest rate or more favorable terms. These loans are called “Streamline refinance” loans because they’re faster and require less paperwork than a traditional refinance loan.

Does my lender set my VA mortgage rate?

Yes, mortgage lenders set their own rates for VA loans. After receiving mortgage preapproval from various lenders, you can view the interest rates from each lender and compare them to find the best VA mortgage rate.

How can I get the best VA loan interest rates?

While VA loans often come with favorable interest rates, the best rates are ultimately available to borrowers with good credit scores. One of the best ways to increase your chances of a low rate is to build up your credit before applying.

The Bottom Line: VA Loans Come With Lower Mortgage Rates

VA loans offer a simple and affordable solution to help military service members, veterans and their spouses buy homes. They come with plenty of perks, including no down payment and lower mortgage rates than conventional mortgages.

If you’re eligible for a VA loan, start an application today to see your rate.