VA loans are mortgages, backed by the US Department of Veterans Affairs, for active and retired members of the military and their spouses.
A VA loan has several advantages over other types of mortgages, including lower interest rates, more flexible credit and down payment options as well as no private mortgage insurance requirement.
For buyers looking to take advantage of their VA loan benefit, here’s what you need to know about the current VA mortgage rate trends.
Current VA loan rate trends
In 2022, mortgage rates increased at the fastest pace in three decades as the Federal Reserve repeatedly raised its benchmark interest rate to bring down inflation. Despite the rapid rise in rates, VA loans typically offer lower interest rates than conventional loans. In October, average VA rates for a 30-year fixed loan were in the high 7% range.
Experts say the Fed may be done with interest rate hikes, but that doesn’t mean mortgage rates will drop in the short term. Inflation is still too high, and the Fed likely won’t start the process of cutting rates anytime soon. As a result, mortgage rates are expected to remain elevated well into 2024.
What are VA loans?
VA loans are home loans backed by the US Department of Veterans Affairs that are available only to borrowers with qualifying military service who are purchasing a primary residence. The VA isn’t the lender but rather insures the loan in case the borrower fails to pay the money back.
Though no down payment is required for VA loans, you’ll likely have to pay a VA funding fee (between 1.4% and 3.6% of the loan) depending on how much you put down and whether you’ve taken out a VA loan in the past. You can roll that fee into the loan amount, which will eliminate the upfront payment but will add long-term costs. There are some individuals who won’t have to pay the VA funding fee. You can see whether you’re exempt here.
Who qualifies for a VA loan?
To determine if you qualify for a VA loan, you must request your Certificate of Eligibility (COE) from the VA via the administration’s eBenefits portal. While eligibility requirements vary based on service dates, a borrower generally should meet one of the following requirements:.
- Current service members who are active for at least 90 days of continuous service
- Veterans who served for at least 90 continuous days of service in peacetime or 181 continuous days during wartime. You may still qualify for a VA loan with fewer days if you were discharged for a disability due to your service.
- National Guard members who served for 90 days of active-duty service or six years of service followed by an honorable discharge
- Surviving spouses of veterans who are missing in action or a prisoner of war, or who died while in service or from a service-related disability
If you’re unsure whether you qualify, you can refer to the VA home loan eligibility list.
Like other government-secured loans, a VA mortgage is typically easier to qualify for than a conventional loan (assuming you meet the military service requirements). While each lender has specific credit score requirements, the VA has no official minimum credit score requirement.
VA loan versus 30-year fixed loan
Even if you’re a qualifying service member or veteran, a VA loan isn’t the only option for financing a home purchase. You can also compare conventional loans and FHA loans, which have different requirements and fees. VA-backed loans tend to have lower borrowing costs, as well as more flexible credit requirements. Here’s a rundown of these different types of mortgages:
Comparison of mortgage types
| VA loans | FHA loans | Conventional loans | |
| Minimum down payment | None required | 3.5% of purchase price (or 10% if your credit score is between 500 and 579) | 3% of purchase price |
| Minimum credit score | None, although you’ll need to meet a lender’s requirements | 580, although some lenders will accept as low as 500 | 620 |
| Mortgage insurance requirement | None | Upfront premium, plus an annual premium for the life of the loan in most cases | Required until you accumulate 20% equity in the home |
| Additional fees to note (other than closing costs) | Funding fee of 1.4% to 3.6% of loan amount | None | None |
How to apply for a VA loan
1. Request your certificate of eligibility: Before proceeding with an official application for a VA loan, you’ll need to get your COE through the VA’s eBenefits portal. If you have questions, call 877-827-3702 to contact a federal home loan specialist. The call center is open Monday through Friday, from 8 a.m. to 6 p.m. ET.
2. Know your loan limits: VA loan limits don’t apply to every borrower. For instance, there is no loan limit for first-time homebuyers or those who have fully paid off a previous VA loan and sold the property. If you have used a VA loan before or are still paying one off, however, there is a certain threshold based on the county where you’re hoping to buy.
3. Get preapproved: A preapproval letter from your lender will demonstrate to sellers that you’re a qualified buyer and can help you set the stage to make an offer on a home. A real estate agent may be able to help guide you through this process.
4. Compare multiple lenders: Every lender is different, and some companies offer special incentives for VA borrowers. Compare interest rates and look for other offers, such as discounted appraisal fees and lender fees.
5. Have the property appraised: The VA’s appraisal standards are a bit more rigorous than for a conventional loan, so you might not be able to buy a fixer-upper. It will need to meet a certain set of minimum property conditions.
6. Close on the loan: After a lender officially approves your application, you’ll need to close on the loan, which involves signing documents and paying closing costs.
What factors determine VA loan rates?
A VA loan interest rate is determined by a range of factors that impact all home loans: Your credit score, the size of your down payment and your debt-to-income ratio, to name a few. VA loan rates are also affected by broader economic conditions, such as inflation and recent rate hikes from the Federal Reserve.
Each lender evaluates your finances differently. By comparing offers from multiple lenders, you’ll find the loan that’s best for you.
How do I find the lowest VA loan rate?
As with all home loans, shopping around with different mortgage lenders is critical to securing the lowest rate possible. The more lenders you interview, the better your chances of finding a lower rate. According to Freddie Mac, prospective homeowners can save thousands over their loan life just by getting multiple quotes.
Pros
No down payment required: Almost all types of home loans require a down payment, but if you take out a VA loan you can put 0% down to buy a home.
Lower credit score requirements: Most conventional loans require a credit score of 620, but some lenders accept lower credit scores with VA loans.
Lower interest rates: VA loans generally have lower interest rates and APRs than conventional loans.
No mortgage insurance is required: No matter the size of your down payment, private mortgage insurance isn’t required for VA loans. Conventional loans, on the other hand, require PMI until you reach 20% equity in the home.
Cons
Narrow eligibility requirements: If you aren’t an active service member, retired service member of the spouse of one, you likely won’t qualify for a VA loan.
VA funding fee: There is a one-time funding fee that other types of loans don’t require.
Primary residences only: In most cases, you can only use a VA loan to buy a primary residence and not a second home or an investment property.
Current mortgage and refinance rates
| Product | Interest rate | APR |
|---|---|---|
| 5/1 ARM | 6.46% | 7.71% |
| 30-year fixed-rate VA | 7.07% | 7.11% |
| 7/1 ARM | 6.63% | 7.75% |
| 15-year fixed-rate | 6.53% | 6.61% |
| 20-year fixed-rate | 6.89% | 6.95% |
| 5/1 ARM jumbo | 6.45% | 7.63% |
| 10/1 ARM | 7.02% | 7.84% |
| 30-year fixed-rate FHA | 6.97% | 7.02% |
| 7/1 ARM jumbo | 6.63% | 7.61% |
| 30-year fixed-rate | 7.06% | 7.11% |
| 15-year fixed-rate jumbo | 6.68% | 6.76% |
| 30-year fixed-rate jumbo | 7.09% | 7.15% |
| 5/1 ARM refinance | 6.45% | 7.67% |
| 10/1 ARM refinance | 7.05% | 7.83% |
| 30-year fixed-rate VA refinance | 7.63% | 7.66% |
| 5/1 ARM jumbo refinance | 6.39% | 7.59% |
| 7/1 ARM refinance | 6.69% | 7.68% |
| 15-year fixed-rate refinance | 6.55% | 6.63% |
| 30-year fixed-rate jumbo refinance | 7.15% | 7.20% |
| 20-year fixed-rate refinance | 6.89% | 6.94% |
| 30-year fixed-rate FHA refinance | 6.95% | 6.99% |
| 7/1 ARM jumbo refinance | 6.63% | 7.61% |
| 30-year fixed-rate refinance | 7.08% | 7.13% |
| 15-year fixed-rate jumbo refinance | 6.74% | 6.82% |
We use information collected by Bankrate, which is owned by the same parent company as CNET, to track daily mortgage rate trends. The above table summarizes the average rates offered by lenders across the country.
FAQs
Yes, you can refinance with a VA loan. You can borrow more money based on your equity with a VA cash-out refinance, or you can opt for a VA IRRRL (Interest Rate Reduction Refinance Loan) to score a lower interest rate that saves you money. It’s important to note that the funding fee on an IRRRL is just 0.5% of the loan amount (or 1.0% for unaffixed manufactured homes).
If you take out a VA loan, you’ll have to pay a one-time funding fee when you close on your home. You can pay the fee upfront or finance it over time by rolling it into your mortgage. The amount of the fee will depend on the type of loan and the size of the loan. For instance, if your down payment is less than 5%, your fee will cost 2.3% of the loan. If you make a down payment between 5% and 10%, the fee will only be assessed at 1.65% of your loan. If you put down 10%, the fee is 1.4%.
There are some exceptions to the VA loan funding fee requirement. For example, an active duty service member who has received a Purple Heart doesn’t have to pay the funding fee. Keep in mind, however, that you’ll still have to pay other standard lender fees that all buyers must pay when purchasing a house, such as closing costs.
More mortgage tools and resources
You can use CNET’s mortgage calculator to help you determine how much house you can afford. The CNET mortgage calculator factors in variables like the size of your down payment, home price and interest rate to help you figure out how large of a mortgage you may be able to afford. Using the CNET mortgage calculator can also help you understand how much of a difference even a slight increase in rates makes in how much interest you’ll pay over the lifetime of your loan.
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